Money illusion and the long-run Phillips curve in staggered wage-setting models

We consider the effect of money illusion - defined referring to Stevens' ratio estimation function - on the long-run Phillips curve in an otherwise standard New Keynesian model of sticky wages. We show that if agents under-perceive real economic variables, negative money non-superneutralities will become more severe. On the contrary, if agents over-perceive real variables, positive money superneutralities will arise.

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Year of publication:	2010-09
Authors:	Vaona, Andrea
Institutions:	Dipartimento di Scienze Economiche, Facoltà di Economia
Subject:	Phillips curve \| inflation \| nominal inertia \| monetary policy \| dynamic general equilibrium \| money illusion \| Stevens' ratio estimation function

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Extent:	application/pdf
Series:	Working Papers.
Type of publication:	Book / Working Paper
Notes:	Number 14/2010 1 pages long
Classification:	E3 - Prices, Business Fluctuations, and Cycles ; E20 - Consumption, Saving, Production, Employment, and Investment. General ; E40 - Money and Interest Rates. General ; E50 - Monetary Policy, Central Banking and the Supply of Money and Credit. General
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008677225