Monopolistic Competition, Aggregate Demand Externalities and Real Effects of Nominal Money / Olivier J. Blanchard, Nobuhiro Kiyotaki.

Format:

Book

Author/Creator:

Blanchard, Olivier J.

Contributor:

National Bureau of Economic Research.

Kiyotaki, Nobuhiro.

Series:

Working Paper Series (National Bureau of Economic Research) no. w1770.

NBER working paper series no. w1770

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1985.

Summary:

A long standing issue in macroeconomics is that of the relation of imperfect competition to fluctuations in output. In this paper we examine the relation between monopolistic competition and the role of aggregate demand in the determination of output. We first show that monopolistically competitive economies exhibit an aggregate demand externality. We then show that, because of this externality, small menu costs, that is small costs of changing prices may lead to large effects of aggregate demand on output and on welfare.

Notes:

Print version record

December 1985.