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State-Dependent Pricing, Firm Entry and Exit, and Non-Neutrality of Money

Author

Listed:
  • Koki Oikawa
  • Kozo Ueda

Abstract

Money is not neutral if firm entry and exit are incorporated into a menu cost model. The real effect of money increases as a firm entry and exit rate increases, and the key is non-uniform firm distribution.

Suggested Citation

  • Koki Oikawa & Kozo Ueda, 2015. "State-Dependent Pricing, Firm Entry and Exit, and Non-Neutrality of Money," CAMA Working Papers 2015-03, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:een:camaaa:2015-03
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    File URL: https://cama.crawford.anu.edu.au/sites/default/files/publication/cama_crawford_anu_edu_au/2015-01/3_2015_oikawa_ueda.pdf
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    References listed on IDEAS

    as
    1. Mark Bils, 2009. "Do Higher Prices for New Goods Reflect Quality Growth or Inflation?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(2), pages 637-675.
    2. Michael Dotsey & Robert G. King & Alexander L. Wolman, 1999. "State-Dependent Pricing and the General Equilibrium Dynamics of Money and Output," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(2), pages 655-690.
    3. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    4. Peter J. Klenow & Oleksiy Kryvtsov, 2008. "State-Dependent or Time-Dependent Pricing: Does it Matter for Recent U.S. Inflation?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(3), pages 863-904.
    5. Emi Nakamura & Jón Steinsson, 2008. "Five Facts about Prices: A Reevaluation of Menu Cost Models," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(4), pages 1415-1464.
    6. Eytan Sheshinski & Yoram Weiss, 1977. "Inflation and Costs of Price Adjustment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 44(2), pages 287-303.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Cozzi, Guido & Pataracchia, Beatrice & Pfeiffer, Philipp & Marco, Ratto, 2017. "How much Keynes and how much Schumpeter? An Estimated Macromodel of the US Economy," Working Papers 2017-01, Joint Research Centre, European Commission.
    2. Oikawa, Koki & Ueda, Kozo, 2018. "The optimal inflation rate under Schumpeterian growth," Journal of Monetary Economics, Elsevier, vol. 100(C), pages 114-125.
    3. Cozzi, Guido & Pataracchia, Beatrice & Pfeiffer, Philipp & Ratto, Marco, 2021. "How much Keynes and how much Schumpeter?," European Economic Review, Elsevier, vol. 133(C).

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    More about this item

    Keywords

    (non-)uniform distribution; menu cost;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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