Obligational Markets and the Mechanics of Inflation
AbstractThe issues that concern us are how wage and price-setting procedures vary with the nature of the good or service being exchanged and what the implications of different procedures for understanding the mechanics of inflation are. We argue that parties to nonstandardized (idiosyncratic) exchange have incentives to regularize trading relations, that this involves devising a governance structure to harmonize the exchange relation, that quantity rather than price bears the brunt of interim adjustments in these circumstances, and that long and variable price lags arise in this way. But while the effects of an inflationary disturbance are more spread out on this account -- which is to say that obligational market exchange relations does, however, complicate the problem of bringing an exogenous inflationary stimulus under control. Macroeconomics is thus linked with microeconomic contracting practices.
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Bibliographic InfoArticle provided by The RAND Corporation in its journal Bell Journal of Economics.
Volume (Year): 9 (1978)
Issue (Month): 2 (Autumn)
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Web page: http://www.rje.org
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- Carlton, Dennis W., 1989.
"The theory and the facts of how markets clear: Is industrial organization valuable for understanding macroeconomics?,"
Handbook of Industrial Organization,
in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 15, pages 909-946
- Dennis W. Carlton, 1987. "The Theory and the Facts of How Markets Clear: Is Industrial Organization Valuable for Understanding Macroeconomics?," NBER Working Papers 2178, National Bureau of Economic Research, Inc.
- Dennis W. Carlton, 1986. "The Theory and the Facts of How Markets Clear: Is Industrial Organization Valuable for Understanding Macroeconomics?," University of Chicago - George G. Stigler Center for Study of Economy and State 44, Chicago - Center for Study of Economy and State.
- Laurence Ball & David Romer, 1993.
"Inflation and the Informativeness of Prices,"
NBER Working Papers
4267, National Bureau of Economic Research, Inc.
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