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We develop and estimate an open economy New Keynesian Phillips curve (NKPC) in which variable demand elasticities give rise to movements in desired markups in response to changes in competitive pressure from abroad. A parametric restriction on our specification yields the standard NKPC, in which...
Persistent link: https://www.econbiz.de/10008558592
future. In most real-world institutional/legal settings the implementation of a helicopter drop of base money requires …
Persistent link: https://www.econbiz.de/10005662197
OECD countries, as in previous studies, and one to a sample of developing countries, using recent World Bank data. We find … predictor of non-monotonic effects. Using the World Bank data, the situations in which the non-monotonic response of national …
Persistent link: https://www.econbiz.de/10005124252
endogeneity but there is also evidence of a world cycle. The consumption-correlation puzzle remains, but its magnitude has greatly …
Persistent link: https://www.econbiz.de/10005792241
The paper argues that Lucas overestimates the Friedman-Bailey type of welfare cost of inflation and neglects other important welfare effects. With an alternative interpretation of the non-observability of low interest rates than the one Lucas gave and the introduction of taxes that reduce the...
Persistent link: https://www.econbiz.de/10005498124
This paper shows that in a small open economy model with downward nominal wage rigidity pegging the nominal exchange rate creates a negative pecuniary externality. This peg-induced externality is shown to cause unemployment, overborrowing, and depressed levels of consumption. The paper...
Persistent link: https://www.econbiz.de/10011083362
The combination of a fixed exchange rate and downward nominal wage rigidity creates a real rigidity. In turn, this real rigidity makes the economy prone to involuntary unemployment during external crises. This paper presents a graphical analysis of alternative policy strategies aimed at...
Persistent link: https://www.econbiz.de/10011083700
Since the onset of the great recession in peripheral Europe, nominal hourly wages have not fallen much from the high levels they had reached during the boom years in spite of widespread increases in unemployment. This observation evokes a well-known narrative in which nominal downward wage...
Persistent link: https://www.econbiz.de/10011083976
an episode of international deleveraging, world consumption demand is depressed and the world interest rate is low …
Persistent link: https://www.econbiz.de/10011196040
This paper analyses the long-run determinants of inflation differentials in a monetary union. First, we aim at establishing some stylized facts relating the regional dispersion in headline inflation rates in the euro area as well as in the main components of the consumer price index. We find...
Persistent link: https://www.econbiz.de/10005067362