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The Macroeconomics of Sticky Prices with Generalized Hazard Functions
Alvarez, Fernando; Lippi, Francesco; Oskolkov, Aleksei - 2022
We give a thorough analytic characterization of a large class of sticky-price models where the firm’s price setting behavior is described by a generalized hazard function. Such a function provides a tractable description of the firm’s price setting behavior and allows for a vast variety of...
Persistent link: https://www.econbiz.de/10013310816
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Wages and Prices are Not Always Sticky : A Century of Evidence for the United States, United Kingdom, and Japan
Gordon, Robert J. - 2021
empirical characterization of price and wage changes over the last century in the U.S., U.K., and Japan, in order to demonstrate … phenomenon rather than the universal fact implied by Okun. The results for the U.K. and Japan com- pound the conflict with Okun … particularly flexible in the U.S. during World War I and its aftermath, in Japan since 1914, and in the U.K. since the mid-1950s …
Persistent link: https://www.econbiz.de/10013231439
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The Law of One Price Without the Border : The Role of Distance Versus Sticky Prices
Crucini, Mario J.; Shintani, Mototsugu; Tsuruga, Takayuki - 2022
cities in Japan. Focusing on intra-national relative prices isolates the border effect and thus enables us to extract the …
Persistent link: https://www.econbiz.de/10013308514
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Contagion During the Initial Banking Panic of the Great Depression
Heitfield, Erik - 2017
The initial banking crisis of the Great Depression has been the subject of debate. Some scholars believe a contagious panic spread among financial institutions. Others argue that suspensions surged because fundamentals, such as losses on loans, drove banks out of business. This paper nests those...
Persistent link: https://www.econbiz.de/10012950840
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The Distribution of the Size of Price Changes
Cavallo, Alberto - 2011
Different theories of price stickiness have distinct implications on the number of modes in the distribution of price changes. We formally test for the number of modes in the price change distribution of 36 supermarkets, spanning 22 countries and 5 continents. We present results for three...
Persistent link: https://www.econbiz.de/10013130556
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Prices are Sticky after All
Kehoe, Patrick J. - 2010
Recent studies say prices change every four months. Economists have interpreted this high frequency as evidence against the importance of sticky prices for the monetary transmission mechanism. Theory implies that if most price changes are regular, as they are in the standard New Keynesian model,...
Persistent link: https://www.econbiz.de/10013138062
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Rule-of-Thumb Consumers and the Design of Interest Rate Rules
Galí, Jordi - 2012
We introduce rule-of-thumb consumers in an otherwise standard dynamic sticky price model, and show how their presence can change dramatically the properties of widely used interest rate rules. In particular, the existence of a unique equilibrium is no longer guaranteed by an interest rate rule...
Persistent link: https://www.econbiz.de/10013114684
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Sticky Prices : A New Monetarist Approach
Head, Allen C. - 2011
Why do some sellers set nominal prices that apparently do not respond to changes in the aggregate price level? In many models, prices are sticky by assumption; here it is a result. We use search theory, with two consequences: prices are set in dollars, since money is the medium of exchange; and...
Persistent link: https://www.econbiz.de/10013119345
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An Exploration of Optimal Stabilization Policy
Mankiw, N. Gregory - 2011
This paper examines the optimal response of monetary and fiscal policy to a decline in aggregate demand. The theoretical framework is a two-period general equilibrium model in which prices are sticky in the short run and flexible in the long run. Policy is evaluated by how well it raises the...
Persistent link: https://www.econbiz.de/10013124860
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The Price Theory of Money, Prospero's Liquidity Trap, and Sudden Stop : Back to Basics and Back
Calvo, Guillermo A. - 2012
Fiat money contains the seeds of its own destruction. It has no intrinsic value and, yet, it can be exchanged for valuable consumption and production goods. As Hahn (1965) shows, this situation puts fiat money's market value or liquidity premium at the brink of collapse. In this paper I will...
Persistent link: https://www.econbiz.de/10013102191