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In the post-World War II period, wage and price levels reacted much less to business contractions than they did in earlier times. Inflation prevailed and its persistence increased. The contractions themselves became relatively short and mild. All these developments have some common roots in the...
Persistent link: https://www.econbiz.de/10012475912
spell durations. Second, we derive a sufficient statistic for the aggregate effect of a monetary shock: given an arbitrary … generalized hazard function, the cumulative impulse response to a once-and-for-all monetary shock is given by the ratio of the …
Persistent link: https://www.econbiz.de/10012481629
an expansionary shock to monetary policy. Of these features, the most important are staggered wage contracts of average …
Persistent link: https://www.econbiz.de/10012470317
rigidities impede policymakers' ability to control inflation. And third, we describe how alternative shock/rigidity combinations …
Persistent link: https://www.econbiz.de/10012471294
This paper attempts to assess whether money can generate persistent economic" fluctuations in dynamic general … for money to produce economic fluctuations as persistent" as those observed in the data …
Persistent link: https://www.econbiz.de/10012472553
This paper uses Taylor's model of overlapping contracts to show that increased wage and price flexibility can easily be destabilizing. This result arises because of the Mundell effect. While lower prices increase output, the expectation of falling prices decreases output. Simulations based on...
Persistent link: https://www.econbiz.de/10012477394
This paper develops a welfare-based model of monetary policy in an open economy. We focus on the extent to which monetary policy should be employed in maintaining the exchange rate. The traditional approach maintains that exchange rate flexibility is desirable in the presence of real...
Persistent link: https://www.econbiz.de/10012471102
prices set for one quarter at a time and a unit consumption elasticity of money demand, does not come close to reproducing … money demand of 0.27 does much better. In it real and nominal exchange rates are about 3 times as volatile as relative price …
Persistent link: https://www.econbiz.de/10012472952
This paper uses a dataset covering the universe of French firm-level sales, imports, and exports over the period 1993-2007 and a quantitative multi-country model to study the international transmission of business cycle shocks at both the micro and the macro levels. The largest firms are both...
Persistent link: https://www.econbiz.de/10012482342
Over the past thirty years, a great deal of business cycle research has been based on purely real models that abstract from the presence of nominal rigidities, and so (at least implicitly) assume that the Phillips curve is vertical. In this paper, I show that such models are fragile, in the...
Persistent link: https://www.econbiz.de/10012456806