Monetary Policy Rules, Real Rigidity and Endogenous Persistence
AbstractThe bulk of literature on real rigidity attempts to identify sources of real rigidity in market imperfections while assuming that the money supply is exogenously set. This paper shows that monetary policy preferences affect the responsiveness of marginal cost to output and through this channel they are shown to determine (i) the degree of real rigidity and (ii) the degree of endogenous persistence. We find that substantial levels of real rigidity and persistence can be generated using plausible monetary parameter values and without relying on additional sources of real rigidity.
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Bibliographic InfoPaper provided by Economics, The Univeristy of Manchester in its series Centre for Growth and Business Cycle Research Discussion Paper Series with number 24.
Length: 26 pages
Date of creation: 2003
Date of revision:
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More information through EDIRC
business cycles; monetary policy rules; targets; real rigidity; endogenous persistence;
Other versions of this item:
- George J. Bratsiotis & Christopher Martin, 2003. "Monetary Policy Rules, Real Rigidity and Endogenous Persistence," Public Policy Discussion Papers 02-31, Economics and Finance Section, School of Social Sciences, Brunel University.
- George J. Bratsiotis & Christopher Martin, 2003. "Monetary Policy Rules, Real Rigidity and Endogenous Persistence," Economics and Finance Discussion Papers 02-31, Economics and Finance Section, School of Social Sciences, Brunel University.
- G J Bratsiotis & C Martin, 2002. "Monetary Policy Rules, Real Rigidity and Endogenous Persistence," The School of Economics Discussion Paper Series 0221, Economics, The University of Manchester.
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- Ronny Mazzocchi, 2013. "Scope and Flaws of the New Neoclassical Synthesis," DEM Discussion Papers 2013/13, Department of Economics and Management.
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