Aggregation and Optimization with State-Dependent Pricing: A Comment

A key argument in Caplin and Leahy (1997) states that the correlation between monetary shocks and output is falling in the variance of the money supply. We demonstrate that this conclusion depends on solving for the correlation in the non-stationary state of the model. In the stationary state, that correlation is initially rising.

MoreLess

Year of publication:	2005-06-15
Authors:	Damjanovic, Vladislav ; Nolan, Charles
Institutions:	Centre for Dynamic Macroeconomic Analysis, University of St. Andrews
Subject:	Ss pricing \| money-output correlations \| macroeconomic dynamics

More details

Extent:	application/pdf
Series:	CDMA Working Paper Series.
Type of publication:	Book / Working Paper
Language:	English
Notes:	Number 200506
Classification:	E31 - Price Level; Inflation; Deflation ; E32 - Business Fluctuations; Cycles ; E37 - Forecasting and Simulation ; E58 - Central Banks and Their Policies
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005696969