Predetermined Wages and Prices and the Impact of Expansionary Government Policy
AbstractThis paper characterizes the monetary equilibria of an economy with commodity and labor contracts. If government policy is not "too variable," there may exist an equilibrium with predetermined wages and prices. In this equilibrium, observed changes in the money supply to finance government purchases have persistent real effects. The paper also provides theoretical support for an inverse relationship between the degree of indexation in contracts and the persistence of policy effects. Copyright 1990 by The Review of Economic Studies Limited.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Review of Economic Studies.
Volume (Year): 57 (1990)
Issue (Month): 2 (April)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0034-6527
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- Bernanke, Ben S & Carey, Kevin, 1996.
"Nominal Wage Stickiness and Aggregate Supply in the Great Depression,"
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- Bernanke, Ben S, 1995.
"The Macroeconomics of the Great Depression: A Comparative Approach,"
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Blackwell Publishing, vol. 27(1), pages 1-28, February.
- Ben S. Bernanke, 1994. "The Macroeconomics of the Great Depression: A Comparative Approach," NBER Working Papers 4814, National Bureau of Economic Research, Inc.
- Antoine Martin & Cyril Monnet, 2000.
"When should labor contracts be nominal?,"
603, Federal Reserve Bank of Minneapolis.
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