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Superneutrality Of Money In Staggered Wage-Setting Models

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Author Info
Ascari, Guido

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Abstract

Staggered wage setting is introduced in a dynamic general-equilibrium monetary model, and the issue of superneutrality of money is addressed. This paper demonstrates that, in an optimizing framework, a mild permanent change in the rate of growth of money could have substantial effects on the steady-state aggregate level of output and welfare. Previous works fail to reproduce these results because they consider restrictively simple utility and production functions. The model exhibits high costs of inflation and provides a rationale for the pursuit of price stability observed in western countries. Therefore, in the presence of staggered adjustment, superneutrality of money proves to be a key issue, which should be taken into account in any economic model with staggered adjustment.

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File URL: http://journals.cambridge.org/abstract_S1365100598008050
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Publisher Info
Article provided by Cambridge University Press in its journal Macroeconomic Dynamics.

Volume (Year): 2 (1998)
Issue (Month): 03 (September)
Pages: 383-400
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:cup:macdyn:v:2:y:1998:i:03:p:383-400_00

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  1. Marika Karanassou & Hector Sala & Dennis Snower, 2007. "Long-Run Inflation-Unemployment Dynamics: The Spanish Phillips Curve and Economic Policy," Kiel Working Papers 1326, Kiel Institute for the World Economy. [Downloadable!]
    Other versions:
  2. Liam Graham & Dennis J. Snower, 2007. "Hyperbolic Discounting and the Phillips Curve," Kiel Working Papers 1346, Kiel Institute for the World Economy. [Downloadable!]
    Other versions:
  3. Karanassou, Marika & Sala, Hector, 2009. "Productivity Growth and the Phillips Curve: A Reassessment of the US Experience," IZA Discussion Papers 4299, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  4. Andrea Vaona & Dennis Snower, 2006. "Increasing Returns to Scale and the Long-Run Phillips Curve," Kiel Working Papers 1277, Kiel Institute for the World Economy. [Downloadable!]
    Other versions:
  5. Guido Ascari & Tiziano Ropele, 2009. "Trend inflation, Taylor principle and indeterminacy," Temi di discussione (Economic working papers) 708, Bank of Italy, Economic Research Department. [Downloadable!]
    Other versions:
  6. Marika Karanassou & Dennis Snower, 2007. "Inflation Persistence and the Philips Curve Revisited," Kiel Working Papers 1349, Kiel Institute for the World Economy. [Downloadable!]
    Other versions:
  7. Robert Amano & Kevin Moran & Stephen Murchison & Andrew Rennison, 2007. "Trend Inflation, Wage and Price Rigidities, and Welfare," Cahiers de recherche 0720, CIRPEE. [Downloadable!]
    Other versions:
  8. Liam Graham & Dennis J. Snower, 2004. "The real effects of money growth in dynamic general equilibrium," Working Paper Series 412, European Central Bank. [Downloadable!]
  9. John Fender & Neil Rankin, 2006. " Disinflation in an Open-Economy Staggered-Wage DGE Model: Exchange-Rate Pegging, Booms and the Role of Preannouncement," CDMA Working Paper Series 0610, Centre for Dynamic Macroeconomic Analysis. [Downloadable!]
  10. Guido Ascari, 2004. "Staggered Prices and Trend Inflation: Some Nuisances," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 7(3), pages 642-667, July. [Downloadable!] (restricted)
    Other versions:
  11. Peter Funk & Bettina Kromen, 2006. "Short-term price rigidity in an endogenous growth model: Non-Superneutrality and a non-vertical long-term Phillips-curve," Working Paper Series in Economics 29, University of Cologne, Department of Economics. [Downloadable!]
  12. Marika Karanassou & Hector Sala & Dennis J. Snower, 2006. "Phillips Curves and Unemployment Dynamics: A Critique and a Holistic Perspective," IZA Discussion Papers 2265, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  13. Ascari, G. & Rankin, N., 2000. "Staggered Wages and Output Dynamics under Disinflation," The Warwick Economics Research Paper Series (TWERPS) 557, University of Warwick, Department of Economics. [Downloadable!]
    Other versions:
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