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Imperfect Competition, Expectations and the Multiple Effects of Monetary Growth

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  • Rankin, Neil

Abstract

In a monetary overlapping generations model with an imperfectly competitive labor market in which output is below its full-employment level, it is shown that different backward-looking rules for forecasting inflation lead to different steady states, despite yielding no forecast errors in the steady state and, in many cases, none in the short or medium run either. Higher monetary growth raises output in some steady states, in others has no effect, and in others lowers it. This contrasts with ad hoc or competitive macromodels where the absence of forecast errors in the steady state usually defines it and its properties uniquely. Copyright 1992 by Royal Economic Society.

Suggested Citation

  • Rankin, Neil, 1992. "Imperfect Competition, Expectations and the Multiple Effects of Monetary Growth," Economic Journal, Royal Economic Society, vol. 102(413), pages 743-753, July.
  • Handle: RePEc:ecj:econjl:v:102:y:1992:i:413:p:743-53
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    Cited by:

    1. Kaas, Leo & Madden, Paul, 2005. "Imperfectly competitive cycles with Keynesian and Walrasian features," European Economic Review, Elsevier, vol. 49(4), pages 861-886, May.
    2. Kaas, Leo, 1998. "Multiplicity of Cournot Equilibria and Involuntary Unemployment," Journal of Economic Theory, Elsevier, vol. 80(2), pages 332-349, June.
    3. Bhattarai, Keshab, 2016. "Unemployment–inflation trade-offs in OECD countries," Economic Modelling, Elsevier, vol. 58(C), pages 93-103.
    4. Rankin, Neil, 1995. "Money in Hart's model of imperfect competition," European Journal of Political Economy, Elsevier, vol. 11(3), pages 557-575, September.
    5. Neil Rankin, 2007. "Imperfect competition and the modelling of expectations in macroeconomics," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 6(3), pages 133-150, December.

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