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Endogenous money or sticky prices?

Listed author(s):
  • Ireland, Peter N.

What explains the correlations between nominal and real variables in the postwar US data? Are these correlations indicative of significant nominal price rigidity? Or do they simply reflect the particular way that monetary policymakers react to developments in the real economy? To answer these questions, this paper uses maximum likelihood to estimate a model of endogenous money. This model allows, but does not require, nominal prices to be sticky. The results show that nominal price rigidity, over and above endogenous money, plays an important role in accounting for key features of the data.

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Article provided by Elsevier in its journal Journal of Monetary Economics.

Volume (Year): 50 (2003)
Issue (Month): 8 (November)
Pages: 1623-1648

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Handle: RePEc:eee:moneco:v:50:y:2003:i:8:p:1623-1648
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505566

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