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2 edition of On inflation and output with costly price changes found in the catalog.

On inflation and output with costly price changes

a simple unifying result

by Roland Benabou

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Published by Dept. of Economics, Massachusetts Institute of Technology in Cambridge, Mass .
Written in English


Edition Notes

Includes bibliographical references (p. 11).

Statementby Roland Benabou and Jerzy D. Konieczny
SeriesWorking paper / Dept. of Economics -- no. 586, Working paper (Massachusetts Institute of Technology. Dept. of Economics) -- no. 586.
ContributionsKonieczny, Jerzy D., Massachusetts Institute of Technology. Dept. of Economics
The Physical Object
Pagination11 p. ;
Number of Pages11
ID Numbers
Open LibraryOL24637661M
OCLC/WorldCa24884790

3. These are the 52 countries for which money supply, price level and real output data were available in the IMF's International Financial Stntistics. A quantity theory view of money growth and inflation would make use of a money growth variable that is adjusted for real output growth by subtracting real output growth from money growth. In the cost-push model of inflation, increases in nominal-wage rates that exceed increases in the productivity of labor: Decrease aggregate supply and increase the price level in the economy If the government uses expansionary monetary or fiscal policies to counter the output-effects of cost-push inflation, then the economy is likely to experience.

Inflation is a persistent increase in the general price level, and has three varieties: demand-pull, cost-push, and built-in. Inflation is an increase in price levels, which decreases the real value, or purchasing power, of money. Demand -pull inflation is an increase in price levels due to an increase in aggregate demand when the employment.   Inflation - Inflation can mean either an increase in the money supply or an increase in price levels. When we hear about inflation, we are hearing about a rise in prices compared to some benchmark.

New Keynesian economics is a school of contemporary macroeconomics that strives to provide microeconomic foundations for Keynesian in their paper looking at the effect of inflation on the frequency of price-changes. specifying how the central bank should adjust the nominal interest rate in response to changes in inflation and output. History. The concept of a lump-sum cost (menu cost) to changing the price was originally introduced by Sheshinski and Weiss () in their paper looking at the effect of inflation on the frequency of price-changes. The idea of applying it as a general theory of Nominal Price Rigidity was simultaneously put forward by several New Keynesian economists in –6.


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On inflation and output with costly price changes by Roland Benabou Download PDF EPUB FB2

Get this from a library. On Inflation and Output with Costly Price Changes: A Simple Unifying Result. [Roland Benabou; Jerzy Konieczny] -- We analyze the effect of inflation on the average output of monopolistic firms facing a small fixed cost of changing nominal prices.

Using Taylor expansions, we derive a general closed-form solution. On Inflation and Output with Costly Price Changes: A Simple Unifying Result Article (PDF Available) in American Economic Review 84(1). Get this from a library.

On inflation and output with costly price changes: a simple unifying result. [Roland Benabou; Jerzy Konieczny; National Bureau of Economic Research.] -- We analyze the effect of inflation on the average output of monopolistic firms facing a small fixed cost of changing nominal prices. Using Taylor expansions, we derive a general closed-form.

On Inflation and Output with Costly Price Changes: A Simple Unifying Result. On Inflation and Output with Costly Price Changes: A Simple Unifying Result We analyze the effect of inflation on the average output of monopolistic firms facing a small fixed cost of changing nominal prices.

Using Taylor expansions, we derive a general closed-form solution for the slope of the long-run Phillips curve. On Inflation and Output with Costly Price Changes: A Simple Unifying Result Roland Benabou, Jerzy Konieczny.

NBER Technical Working Paper No. Issued in May NBER Program(s):Economic Fluctuations and Growth Program. We analyze the effect of inflation on the average output of monopolistic firms facing a small fixed cost of changing.

The output-inflation trade-off is investigated in a rational expectations equilibrium economy in which costly price setting makes it inefficient for agents to vary their prices at every instant. It is shown that "sticky prices" are not some exogenous source of output fluctuation but result from the monetary policy process.

An economy with slow and counterinflationary money growth Cited by: "The Output-Inflation Tradeoff when Prices are Costly to Change," UWO Department of Economics Working PapersUniversity of Western Ontario, Department of Economics.

More about this item Statistics. Inflation: Causes, Costs, and Current Status Congressional Research Service 2 a monetary phenomenon resulting from and accompanied by a rise in the quantity of money relative to output.”5 Although this view is generally accepted, it is, in fact, consistent with two quite different views as to the cause of Size: KB.

The direct relationship between oil and inflation was evident in the s when the cost of oil rose from a nominal price of $3 before the oil.

Note that umc/P is the imported materials cost as a share of the price of a unit of output, while ulc/P is the wage cost as a share of the price of a unit of output. For example, suppose the price per unit is $5, imported materials cost $1 per unit and labour costs $ per unit.

Further, inflationary situation may be as­sociated with the fall in output, particularly if inflation is of the cost-push variety.

Thus, there is no strict relationship between prices and output. An increase in aggregate demand will increase both prices and output, but a supply shock will raise prices and lower output.

Authors James Bullard and Steven Russell, for example, suggest approximately a 1 percent output loss for each 1 percent increase in inflation above price stability.3 Martin Feldstein has examined how interactions between inflation and the tax system discourage saving while increasing housing demand.4Author: Richard G.

Anderson. This volume presents the latest thoughts of a brilliant group of young economists on one of the most persistent economic problems facing the United States and the world, inflation. Rather than attempting an encyclopedic effort or offering specific policy recommendations, the contributors have emphasized the diagnosis of problems and the description of events that economists Reviews: 1.

Inflation is a measure of the rate of rising prices of goods and services in an economy. Inflation can occur when prices rise due to increases in production costs, such as raw materials and wages. Prices in an economy do not stay the same.

Over time the price level changes (i.e., there is inflation or deflation). A change in the price level changes the value of economic measures denominated in dollars. Values that increase or decrease with the price level are called nominal values.

Real values are adjusted for price Size: KB. In the chart, CPI refers to the Consumer Price Index, a measurement that tracks changes in prices.

Changes in the CPI are used to identify periods of inflation and : Jean Folger. High inflation has the power to decimate savings accounts and render them worthless, while it also can create price and market instability. These negative consequences can, in turn, have an effect on output and the employment rate under certain circumstances.

In most cases, high inflation can be preempted by the. 'Output price indexes are ets Producer Price Indexes. 2Computed from a log-linear time trend regression. Pi, Xi, IC, is the share of the ith input in the total value of output (or cost). Equation (2) makes clear that cost inflation depends upon input price inflation and relative cost shares.

For example, if input prices are constant, average File Size: KB. Macroeconomics Ch STUDY. Flashcards. Learn. Write. Spell. Test. PLAY. Match. Gravity. Created by. david_espinda3. Terms in this set (15) how fast the price of factors of production respond to changes in the price level.

What determines the slope of the aggregate supply curve is. Cost-Push Inflation. caused by an increase in prices of inputs. ceeded in limiting recent bursts of inflation only by tolerating reduced output and employment.

Germany has pursued a successful anti-inflation policy, says Gordon, but "the cost of this policy was relatively slow output growth of only % between andcompared to % in the United States." Earlier, German growth had been well above.Start studying Macroeconomics Exam 2.

Learn vocabulary, terms, and more with flashcards, games, and other study tools. Firms may be reluctant to change prices for fear of setting off a price war or losing customers to rivals. Cost-push inflation increases real output .Inflation refers to the average changes in price economy-wide, not the change in price in a particular industry.

Further, inflation refers to the rate of change in prices, not the level of prices at any one time. Most economists agree that in the long run, inflation .