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Asymmetric Price Adjustment and Economic Fluctuations / Laurence Ball, N. Gregory Mankiw.
- Format:
- Book
- Author/Creator:
- Ball, Laurence.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w4089.
- NBER working paper series no. w4089
- Language:
- English
- Subjects (All):
- Inflation (Finance)--Mathematical models.
- Inflation (Finance).
- Prices--Mathematical models.
- Prices.
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 1992.
- Cambridge, MA : National Bureau of Economic Research, 1992.
- Summary:
- This paper considers a possible explanation for asymmetric adjustment of nominal prices. We present a menu-cost model in which positive trend inflation causes firms' relative prices to decline automatically between price adjustments. In this environment, shocks that raise firms' desired prices trigger larger price responses than shocks that lower desired prices. We use this model of asymmetric adjustment to address three issues in macroeconomics: the effects of aggregate demand, the effects of sectoral shocks, and the optimal rate of inflation.
- Notes:
- Print version record
- June 1992.
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