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adjustments using a macro-financial model of a small open economy featuring heterogeneous expectation formation (chartists and … other things the mechanisms through which the first type of agents tends to destabilise the economy. Global stability can be …
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In the data, a large fraction of price changes are temporary. We provide a simple menu cost model which explicitly includes a motive for temporary price changes. We show that this simple model can account for the main regularities concerning temporary and permanent price changes. We use the...
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