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This paper shows that price rigidity evolves in an economy populated by imperfectly rational agents who experiment with alternative rules of thumb. In the model, firms must set their prices in face of aggregate demand shocks. Their payoff depends on the level of aggregate demand, as well as on...
Persistent link: https://www.econbiz.de/10005051547
Households in some European countries increased their indebtedness massively over the past 20 years. Besides household debt, also government debt and corporate debt are in some countries at levels not seen before. While there is a common agreement that these high debt levels are not sustainable...
Persistent link: https://www.econbiz.de/10010877972
to the share of the term in office elapsed, political and regime instability, the occurrence of elections, and inflation … independence. This is confirmed in models for cross-section inflation in which TOR becomes insignificant once its endogeneity is …
Persistent link: https://www.econbiz.de/10005765668
The effect of a permanent change of inflation on the distribution of wealth is analyzed in a general equilibrium OLG … of inflation results in a lower stock market participation rate; in addition, the distribution of wealth becomes more … anticipated inflation are considerably lower than in Imrohoroglu (1992). …
Persistent link: https://www.econbiz.de/10005765683
. Therefore, in periods with inflation generous tax depreciation provisions do not adequately promote private investment as … designed, but partly compensate such losses caused by inflation. …
Persistent link: https://www.econbiz.de/10005765776
This paper reviews the literature on the effects of low steady-state inflation on wage formation, focusing on four … different effects. First, under low inflation, downward nominal wage rigidity (DNWR) may prevent real wage cuts that would have … happened had inflation been higher. Second, wages (and prices) are given in nominal contracts, and inflation affects both how …
Persistent link: https://www.econbiz.de/10005765778
factors on observed inflation rates first in an accounting framework and then by relying on panel estimations. Our estimation … root of different inflation rates in Europe including the EU-27. Among others, we study the structural and cyclical factors … descriptive statistics. Subsequently, we set out the possible mismatches between price level convergence and inflation rates …
Persistent link: https://www.econbiz.de/10005765781
This paper explores the impact of the exchange rate regime on inflation and output in the Central and Eastern European … exchange rate stability have a better explanatory power than the de jure measures in the inflation and growth equations. For … the whole observation period the estimations reveal a significant impact of exchange rate stability on low inflation as …
Persistent link: https://www.econbiz.de/10005766042
rate policy helps to reconcile the inflation and output persistence with empirical observations for the US economy. We show … findings for the inflation inertia in a model with capital adjustment costs and variable capacity utilization, the output … response to an interest shock is found to be too large and no longer hump-shaped in this case. In addition we find that the …
Persistent link: https://www.econbiz.de/10005766166
-shaped relation between the membership size of MPCs and inflation; our results suggest that the lowest level of inflation is reached … at MPCs with about seven to ten members. Similar results are obtained for other measures, such as inflation variability …
Persistent link: https://www.econbiz.de/10005766195