Aggregation and Stabilization Policy in a Multi-Contract Economy
AbstractThis paper presents a model of a multi-sector economy in which each sector is characterized by a different type of wage or price stickiness. The various sectors experience the same exogenous shocks and have the same money supply. The analysis shows demand shocks pose no serious problems for stabilization policy. In contrast, supply shocks force the policymaker to choose between stability in one sector and stability in another. The analysis also shows the economy cannot be usefully aggregated into a single sector model. Such an aggregation misleads the economist as to the economy's underlying structure and obscures the tradeoffs the policymaker must confront. In particular, a feedback rule chosen on the basis of an aggregate model could be better or worse than a passive policy.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 0873.
Date of creation: Apr 1982
Date of revision:
Publication status: published as Blinder, Alan S. and N. Gregory Mankiw. "Aggregation and Stabilization Policy in a Multi-Contract Economy." Journal of Monetary Economics, Vol. 13, No. 1, (January 1984), pp. 67-86.
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
Other versions of this item:
- Blinder, Alan S. & Mankiw, N. Gregory, 1984. "Aggregation and stabilization policy in a multi-contract economy," Journal of Monetary Economics, Elsevier, Elsevier, vol. 13(1), pages 67-86, January.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Branson, William H. & Rotemberg, Julio J., 1980.
"International adjustment with wage rigidity,"
European Economic Review, Elsevier,
Elsevier, vol. 13(3), pages 309-332, May.
- William H. Branson & Julio J. Rotemberg, 1981. "International adjustment with wage rigidity," NBER Chapters, in: International Seminar on Macroeconomics, pages 309-332 National Bureau of Economic Research, Inc.
- William H. Branson & Julio J. Rotemberg, 1991. "International Adjustment with Wage Rigidity," NBER Chapters, in: International Volatility and Economic Growth: The First Ten Years of The International Seminar on Macroeconomics, pages 13-44 National Bureau of Economic Research, Inc.
- Brunner, Karl & Meltzer, Allan H., 1976. "The Phillips curve," Carnegie-Rochester Conference Series on Public Policy, Elsevier, Elsevier, vol. 1(1), pages 1-18, January.
- Jeffrey D. Sachs, 1979. "Wages, Profits, and Macroeconomic Adjustment: A Comparative Study," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 10(2), pages 269-332.
- Blinder, Alan S, 1982.
"Inventories and Sticky Prices: More on the Microfoundations of Macroeconomics,"
American Economic Review, American Economic Association,
American Economic Association, vol. 72(3), pages 334-48, June.
- Alan S. Blinder, 1981. "Inventories and Sticky Prices: More on the Microfoundations of Macroeconomics," NBER Working Papers 0620, National Bureau of Economic Research, Inc.
- Lucas, Robert Jr, 1976. "Econometric policy evaluation: A critique," Carnegie-Rochester Conference Series on Public Policy, Elsevier, Elsevier, vol. 1(1), pages 19-46, January.
- Cooley, Thomas F. & Hansen, Gary D., 1998. "The role of monetary shocks in equilibrium business cycle theory: Three examples," European Economic Review, Elsevier, Elsevier, vol. 42(3-5), pages 605-617, May.
- Joshua Aizenman & Jacob A. Frenkel, 1986.
"Sectorial Wages and the Real Exchange Rate,"
NBER Working Papers
1801, National Bureau of Economic Research, Inc.
- John V. Duca & David D. VanHoose, 1998.
"The rise of goods-market competition and the fall of nominal wage contracting: endogenous wage contracting in a multisector economy,"
Working Papers, Federal Reserve Bank of Dallas
9805, Federal Reserve Bank of Dallas.
- Duca, John V. & Van Hoose, David D., 2001. "The Rise of Goods-Market Competition and the Fall of Nominal Wage Contracting: Endogenous Wage Contracting in a Multisector Economy," Journal of Macroeconomics, Elsevier, Elsevier, vol. 23(1), pages 1-29, January.
- Peneva, Ekaterina, 2011. "Some evidence on factor intensity and price rigidity," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 35(10), pages 1652-1658, October.
- Georgios Chortareas & Christos Mavrodimitrakis, 2011. "Fiscal Policies and Monetary Leadership in a Monetary Union with a Deficit-Concerned Central Bank," Central European Journal of Economic Modelling and Econometrics, CEJEME, CEJEME, vol. 3(1), pages 1-24, March.
- Habib Ahmed & Stephen M. Miller, 1996.
"Monetary and Exchange Rate Policy in Multisectorial Economies,"
Working papers, University of Connecticut, Department of Economics
1996-11, University of Connecticut, Department of Economics.
- Ahmed, Habib & Miller, Stephen M., 1997. "Monetary and exchange rate policy in multisectoral economies," Journal of Economics and Business, Elsevier, Elsevier, vol. 49(4), pages 321-334.
- Duca, John V. & Vanhoose, David D., 1998. "The Rise of Goods-Market Competition and the Decline in Wage Indexation: A Macroeconomic Approach," Journal of Macroeconomics, Elsevier, Elsevier, vol. 20(3), pages 579-598, July.
- Gangopadhyay, Partha & Gangopadhyay, Renu, 2008. "Flexible reservation prices and price inflexibility," Economic Modelling, Elsevier, Elsevier, vol. 25(3), pages 499-511, May.
- David D. VanHoose, 2004. "The New Open Economy Macroeconomics: A Critical Appraisal," Open Economies Review, Springer, Springer, vol. 15(2), pages 193-215, 04.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.