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Monetary Misperceptions, Output, and Inflation Dynamics

  • FABRICE COLLARD
  • HARRIS DELLAS

We revisit the contribution of misperceived money to business cycles and, in particular, to the inertial dynamics of inflation following a monetary policy shock. We establish three things. First, the difference between preliminary and revised money data captures monetary misperceptions well. Second, misperceived money is quantitatively substantial and also matters significantly for economic activity. And third, imperfect information about monetary aggregates can help the standard NK model exhibit inertial inflation dynamics. Copyright (c) 2010 The Ohio State University.

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Article provided by Blackwell Publishing in its journal Journal of Money, Credit and Banking.

Volume (Year): 42 (2010)
Issue (Month): 2-3 (03)
Pages: 483-502

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Handle: RePEc:mcb:jmoncb:v:42:y:2010:i:2-3:p:483-502
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