Download or read book Sticky Information Versus Sticky Prices written by N. Gregory Mankiw and published by . This book was released on 2003 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines a model of dynamic price adjustment based on the assumption that information disseminates slowly throughout the population. Compared to the commonly used sticky-price model, this sticky-information model displays three, related properties that are more consistent with accepted views about the effects of monetary policy. First, disinflations are always contractionary (although announced disinflations are less contractionary than surprise ones). Second, monetary policy shocks have their maximum impact on inflation with a substantial delay. Third, the change in inflation is positively correlated with the level of economic activity.

Download or read book Sticky Prices Vs Sticky Information written by Christian Bredemeier and published by . This book was released on 2011 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Sticky Information Vs Sticky Prices written by and published by . This book was released on 2003 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book A Quantitative Comparison of Sticky price and Sticky information Models of Price Setting written by Michael T. Kiley and published by . This book was released on 2006 with total page 66 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Pragmatic Capitalism written by Cullen Roche and published by Macmillan. This book was released on 2014-07-08 with total page 252 pages. Available in PDF, EPUB and Kindle. Book excerpt: An insightful and original look at why understanding macroeconomics is essential for all investors

Download or read book Do Sticky Prices Need to be Replaced with Sticky Information written by Bill Dupor and published by . This book was released on 2006 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: A first generation of research found it difficult to reconcile observed inflation and cyclical output with the fixed price mechanism. Since then, researchers have been divided roughly into two camps. The first camp argues that the original mechanism is largely successful once cyclical output is replaced with labor's share. The second camp argues for a wholesale replacement of fixed prices, e.g., with 'sticky information.' We take up the question by estimating a 'dual stickiness' model that integrates sticky prices and information. We find that both rigidities are present in aggregate U.S. data. Thus, sticky information cannot replace sticky prices. Our dual stickiness model performs comparably to the hybrid sticky price model, which allows for a fraction of backward-looking firms. In particular, the hybrid model's backward-looking behavior arises endogenously under dual stickiness. As such, the dual stickiness model (with an estimated seven month average information delay) may provide more plausible microeconomic foundations.--Publisher's description.

Download or read book Sticky Information Vs Sticky Prices written by Mathias Trabandt and published by . This book was released on 2007 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: How can we explain the observed behavior of aggregate inflation in response to e.g. monetary policy changes? Mankiw and Reis (2002) have proposed sticky information as an alternative to Calvo sticky prices in order to model the conventional view that i) inflation reacts with delay and gradually to a monetary policy shock, ii) announced and credible disinflations are contractionary and iii) inflation accelerates with vigorous economic activity. I use a fully-fledged DSGE model with sticky information and compare it to Calvo sticky prices, allowing also for dynamic inflation indexation as in Christiano, Eichenbaum, and Evans (2005). I find that sticky information and sticky prices with dynamic inflation indexation do equally well in my DSGE model in delivering the conventional view.

Download or read book The General Theory of Employment Interest and Money written by John Maynard Keynes and published by . This book was released on 1989 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Sticky Information Versus Sticky Prices Revisited written by Takushi Kurozumi and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Asking About Prices written by Alan Blinder and published by Russell Sage Foundation. This book was released on 1998-01-08 with total page 412 pages. Available in PDF, EPUB and Kindle. Book excerpt: Why do consumer prices and wages adjust so slowly to changes in market conditions? The rigidity or stickiness of price setting in business is central to Keynesian economic theory and a key to understanding how monetary policy works, yet economists have made little headway in determining why it occurs. Asking About Prices offers a groundbreaking empirical approach to a puzzle for which theories abound but facts are scarce. Leading economist Alan Blinder, along with co-authors Elie Canetti, David Lebow, and Jeremy B. Rudd, interviewed a national, multi-industry sample of 200 CEOs, company heads, and other corporate price setters to test the validity of twelve prominent theories of price stickiness. Using everyday language and pertinent scenarios, the carefully designed survey asked decisionmakers how prominently these theoretical concerns entered into their own attitudes and thought processes. Do businesses tend to view the costs of changing prices as prohibitive? Do they worry that lower prices will be equated with poorer quality goods? Are firms more likely to try alternate strategies to changing prices, such as warehousing excess inventory or improving their quality of service? To what extent are prices held in place by contractual agreements, or by invisible handshakes? Asking About Prices offers a gold mine of previously unavailable information. It affirms the widespread presence of price stickiness in American industry, and offers the only available guide to such business details as what fraction of goods are sold by fixed price contract, how often transactions involve repeat customers, and how and when firms review their prices. Some results are surprising: contrary to popular wisdom, prices do not increase more easily than they decrease, and firms do not appear to practice anticipatory pricing, even when they can foresee cost increases. Asking About Prices also offers a chapter-by-chapter review of the survey findings for each of the twelve theories of price stickiness. The authors determine which theories are most popular with actual price setters, how practices vary within different business sectors, across firms of different sizes, and so on. They also direct economists' attention toward a rationale for price stickiness that does not stem from conventional theory, namely a strong reluctance by firms to antagonize or inconvenience their customers. By illuminating how company executives actually think about price setting, Asking About Prices provides an elegant model of a valuable new approach to conducting economic research.

Download or read book Sticky Prices Versus Sticky Information written by Gauti B. Eggertsson and published by . This book was released on 2017 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper shows that government spending multiplier at the zero lower bound (ZLB) is larger under sticky information than under sticky prices. Similarly, well known paradoxes, e.g., the paradox of toil and the paradox of flexibility become more severe under sticky information. For the case of sticky information it is important to assume that the fiscal policy intervention coincides with the duration of zero interest rates, while such distinction is less important in some special cases for sticky prices. This allows us to unify and clarify results that may appear to contradict each other in the literature.

Download or read book A Tale of Two Rigidities written by Edward S. Knotek and published by . This book was released on 2013 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: Macroeconomic models with microeconomic foundations face a difficult task: they must be consistent with facts both large and small. This paper proposes a model that combines two strands of the literature on stickiness in order to match both sets of facts. (1) Firms acquire information infrequently, as in Mankiw and Reis (2002), resulting in sticky information. (2) Firms face heterogeneous, fixed menu costs which they must pay to change prices, leading to state-dependent sticky prices at the micro level. I estimate key structural parameters and show that a model of sticky prices in a sticky-information environment is consistent with both micro and macro evidence.

Download or read book The Fiscal Theory of the Price Level written by John H. Cochrane and published by Princeton University Press. This book was released on 2023-01-17 with total page 585 pages. Available in PDF, EPUB and Kindle. Book excerpt: A comprehensive account of how government deficits and debt drive inflation Where do inflation and deflation ultimately come from? The fiscal theory of the price level offers a simple answer: Prices adjust so that the real value of government debt equals the present value of taxes less spending. Inflation breaks out when people don’t expect the government to fully repay its debts. The fiscal theory is well suited to today’s economy: Financial innovation undermines money demand, and central banks don’t control the money supply or aggressively change interest rates, invalidating classic theories, while large debts and deficits threaten inflation and constrain monetary policy. This book presents a comprehensive account of this important theory from one of its leading developers and advocates. John Cochrane aims to make fiscal theory useful as a conceptual framework and modeling tool, and for analyzing history and policy. He merges fiscal theory with standard models in which central banks set interest rates, giving a novel account of monetary policy. He generalizes the theory to explain data and make realistic predictions. For example, inflation decreases in recessions despite deficits because discount rates fall, raising the value of debt; specifying that governments promise to partially repay debt avoids classic puzzles and allows the theory to apply at all times, not just during periods of high inflation. Cochrane offers an extensive rethinking of monetary doctrines and institutions through the eyes of fiscal theory, and analyzes the era of zero interest rates and post-pandemic inflation. Filled with research by Cochrane and others, The Fiscal Theory of the Price Level offers important new insights about fiscal and monetary policy.

Download or read book Imperfect Competition and Sticky Prices written by N. Gregory Mankiw and published by MIT Press. This book was released on 1991 with total page 448 pages. Available in PDF, EPUB and Kindle. Book excerpt: These two volumes bring together a set of important essays that represent a "new Keynesian" perspective in economics today. This recent work shows how the Keynesian approach to economic fluctuations can be supported by rigorous microeconomic models of economic behavior. The essays are grouped in seven parts that cover costly price adjustment, staggering of wages and prices, imperfect competition, coordination failures, and the markets for labor, credit, and goods. An overall introduction, brief introductions to each of the parts, and a bibliography of additional papers in the field round out this valuable collection.Volume 1 focuses on how friction in price setting at the microeconomic level leads to nominal rigidity at the macroeconomic level, and on the macroeconomic consequences of imperfect competition, including aggregate demand externalities and multipliers. Volume 2 addresses recent research on non-Walrasian features of the labor, credit, and goods markets. Contributors George A Akerlof, Costas Azariadis, Laurence Ball, Ben S. Bernanke, Mark Bits, Olivier J. Blanchard, Alan S. Blinder, John Bryant, Andrew S. Caplin, Dennis W. Carlton, Stephen G. Cecchetti, Russell Cooper, Peter A. Diamond, Gary Fethke, Stanley Fischer, Robert E. Hall, Oliver Hart, Andrew John, Nobuhiro Kiyotaki, Alan B. Krueger, David M. Lilien, Ian M. McDonald, N. David Mankiw, Arthur M. Okun, Andres Policano, David Romer, Julio J. Rotemberg, Garth Saloner, Carl Shapiro, Andrei Shleifer, Robert M. Solow, Daniel F. Spulber, Joseph E. Stiglitz, Lawrence H. Summers, John Taylor, Andrew Weiss, Michael Woodford, Janet L. Yellen

Download or read book Sticky Information Versus Sticky Prices written by Fang Yao and published by . This book was released on 2011 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper compares sticky-price and sticky-information model under a more general staggering price-setting scheme. Different to Mankiw and Reis (2002), who show that, under the Calvo staggering assumption, two models generate very different inflation dynamics, I extend the constant-hazard function underlying the Calvo assumption to a general hazard function. I find that, without strategic complementarity in the price-setting, two models generate similar inflation dynamics. The distribution of price durations dominates the shape of impulse response in both models. Furthermore, with strategic complementarity, the hazard function continues to play an important role in forming inflation. In particular, under increasing hazard functions, the inflation response of the sticky-price model is more consistent with the SVAR evidence than the sticky-information model.

Download or read book Sticky Price and Sticky Information Price Setting Models written by Benjamin D. Keen and published by . This book was released on 2007 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using a partial equilibrium framework, Mankiw and Reis show that a sticky information model can generate a lagged and gradual inflation response after a monetary policy shock, whereas a sticky price model cannot. Our study demonstrates that the finding is sensitive to their models parameterization. To determine a plausible parameterization, we specify a general equilibrium model with sticky information. In that model, we find that inflation peaks only one period after a monetary disturbance. A sensitivity analysis of our results reveals that the inflation peak is delayed by including real rigidities when the monetary policy instrument is money growth, whereas inflation peaks immediately when the policy instrument is the nominal interest rate.

Download or read book Macroeconomic Consequences of Sticky Prices and Sticky Information written by Tomiyuki Kitamura and published by . This book was released on 2008 with total page 156 pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract: This dissertation examines macroeconomic consequences of sticky prices and sticky information. It consists of three essays. The first essay (Chapter 1) develops a simple model combining both sticky prices and sticky information. The duration of the stickiness is fixed. I argue that combining the two types of stickiness creates a very powerful mechanism to generate persistent inflation dynamics. In particular, without assuming empirically implausible degree of price stickiness, the model can capture the hump-shaped behavior of inflation. That is, the inflation rise for some periods after a positive monetary shock and then gradually returns to the steady state level. Also, I show that when the two types of stickiness coexist, the peak of inflation is more delayed compared to the models with only one of the two types of stickiness. Finally, I also show that the results do not depend on the independence of information updating schedule from price setting schedule. The second essay (Chapter 2) empirically examines a model integrating sticky prices and sticky information. The duration of the stickiness is now random. I find that both rigidities are present in U.S. data. I also show that this dual stickiness model's closest competitor is the hybrid New Keynesian model, which assumes backward-looking behavior of firms. For both models, current inflation depends in part on last period's inflation. The former model achieves this dependence endogenously through the interaction of the two rigidities, rather than through backward-looking behavior. U.S. data supports the dual stickiness over the hybrid model because lagged expectations terms appear in the former's inflation Euler equation. Finally, I show that it is quantitatively important to distinguish between the two by simulating a dynamic general equilibrium model under each of the two inflation equations. The third essay (Chapter 3) investigates optimal monetary policy using models developed in the previous two chapters. Two main results characterize the optimal policy. First, in the presence of cost-push shocks, a simple elastic price target rule is optimal, regardless of the degree of each type of stickiness, and regardless of whether the specification of stickiness is fixed-duration or random-duration. Second, the dynamics under the optimal policy in the model are more persistent than those in the models with either type of stickiness. I also evaluate how important it is for the central bank to distinguish the dual stickiness model from an existing alternative, the hybrid New Keynesian model. The results show that, in the presence of possible error in fulfilling the optimal rule, the welfare loss can be huge when the central bank fails to recognize the dual stickiness model as the true model of the economy.