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Monetary Persistence, Imperfect Competition, and Staggering Complementarities
Merkl, Christian; Snower, Dennis J. - Institut für Weltwirtschaft (IfW) - 2005
This paper explores the influence of wage and price staggering on monetary persistence. First, our analysis indicates that the degree of monetary persistence generated by wage vis-à-vis price staggering depends on the relative competitiveness of the labor and product markets. We show that the...
Persistent link: https://www.econbiz.de/10010887022
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The effect of inflation on real commodity prices
Reicher, Christopher; Utlaut, Johannes - Institut für Weltwirtschaft (IfW) - 2011
Recent research has shown that economic conditions have an important effect on real commodity prices. We quantify the contribution of fluctuations in inflation to this particular link. In the data, a temporary rise in inflation causes real commodity prices to rise, as does a rise in trend...
Persistent link: https://www.econbiz.de/10009292398
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Price Bargaining, the Persistence Puzzle, and Monetary Policy
Wesselbaum, Dennis - Institut für Weltwirtschaft (IfW) - 2010
In the recent New Keynesian literature a standard assumption is that the price for which an intermediate good is sold to the final good firm is equal to the marginal costs of the intermediate good firm. However, there is empirical evidence that this need not to hold. This paper introduces price...
Persistent link: https://www.econbiz.de/10008530638
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Inequality Aversion and the Long-Run Effectiveness of Monetary Policy: Bilateral versus Group Comparison
Ahrens, Steffen - Institut für Weltwirtschaft (IfW) - 2012
In this paper we incorporate the two most prominent approaches of inequality aversion, i.e. Fehr and Schmidt (1999) and Bolton and Ockenfels (2000) into an otherwise standard New Keynesian macro model and compare them with respect to their influence on the long-run effectiveness of monetary...
Persistent link: https://www.econbiz.de/10010886891
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A Theory of Price Adjustment under Loss Aversion
Ahrens, Steffen; Pirschel, Inske; Snower, Dennis - Institut für Weltwirtschaft (IfW) - 2014
We present a new partial equilibrium theory of price adjustment, based on consumer loss aversion. In line with prospect … theory, the consumers' perceived utility losses from price increases are weighted more heavily than the perceived utility … an otherwise standard dynamic neoclassical model of monopolistic competition. The resulting theory of price adjustment is …
Persistent link: https://www.econbiz.de/10010886934
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Credible Disinflation and Delayed Slumps under Real Wage Rigidity
Tesfaselassie, Mewael F. - Institut für Weltwirtschaft (IfW) - 2014
The paper studies the effects of credible disinflation in the presence of real wage rigidity, comparing the Calvo and Rotemberg price setting mechanisms (the two popular variants of the New-Keynesian model). In both types of models, a credible, gradual disinflation is shown to lead to a delayed...
Persistent link: https://www.econbiz.de/10010886956
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Fairness and the disinflation puzzle
Lunardelli, Andre - Institut für Weltwirtschaft (IfW) - 2014
Following Driscoll and Holden (2004), I model forward-looking workers who consider it unfair if a wage adjustment fails to match past inflation. However, the present paper proposes a much larger effect by using the job finding rate as the measure of workers' opportunities outside the firm rather...
Persistent link: https://www.econbiz.de/10010956041
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Envy, Guilt, and the Phillips Curve
Ahrens, Steffen; Snower, Dennis - Institut für Weltwirtschaft (IfW) - 2012
We incorporate inequity aversion into an otherwise standard New Keynesian dynamic equilibrium model with Calvo wage contracts and positive inflation. Workers with relatively low incomes experience envy, whereas those with relatively high incomes experience guilt. The former seek to raise their...
Persistent link: https://www.econbiz.de/10009421748
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DSGE Models and Central Banks
Tovar, Camilo Ernesto - Institut für Weltwirtschaft (IfW) - 2008
Over the past 15 years there has been remarkable progress in the specification and estimation of dynamic stochastic general equilibrium (DSGE) models. Central banks in developed and emerging market economies have become increasingly interested in their usefulness for policy analysis and...
Persistent link: https://www.econbiz.de/10005083409
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The Optimal Inflation Rate and Firm-Level Productivity Growth
Weber, Henning - Institut für Weltwirtschaft (IfW) - 2012
Empirical data show that firms tend to improve their ranking in the productivity distribution over time. A sticky-price model with firm-level productivity growth fits this data and predicts that the optimal long-run inflation rate is positive and between 1.5% and 2% per year. In contrast, the...
Persistent link: https://www.econbiz.de/10010886886