Monetary neutrality in one specific class of DGE model with staggered prices
AbstractIn this paper I show that monetary neutrality proposition holds for one specific parameterization of a dynamic general equilibrium model of monopolistic competition even if nominal rigidity in a form of staggered price setting or partial adjustment price-setting mechanism is present in a model. This parameterization is a result of a zero profit condition for intermediate goods producers and it requires that degree of increasing returns in intermediate goods production is equal to price- marginal costs markup.
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Length: 10 pages
Date of creation: 10 Dec 2001
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macroeconomics business cycles staggered prices;
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