On Endogenously Staggered Prices
Taylor's model of staggered contracts is an influential explanation for nominal inertia and the persistent real effects of nominal shocks. However, in standard imperfect competition models, if agents are allowed to choose the timing of pricing decisions, they will typically choose to synchronize. This paper provides a simple model of imperfect competition which produces stable staggering. Our argument relies on strategic interaction at two levels—between firms within an industries, and across industries—and produces a continuum of staggered price equilibria. These equilibria are strict, and hence stable under a simple adaptive learning process. Copyright 2002, Wiley-Blackwell.
Volume (Year): 69 (2002)
Issue (Month): 1 ()
|Contact details of provider:|| |
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Olivier J. Blanchard, 1985.
"The Wage Price Spiral,"
NBER Working Papers
1771, National Bureau of Economic Research, Inc.
- Laurence Ball & David Romer, 1987.
"The Equilibrium and Optimal Timing of Price Changes,"
NBER Working Papers
2412, National Bureau of Economic Research, Inc.
- Ball, Laurence & Romer, David, 1989. "The Equilibrium and Optimal Timing of Price Changes," Review of Economic Studies, Wiley Blackwell, vol. 56(2), pages 179-98, April.
- Laurence Ball & David Romer, 1987. "The Equilibrium and Optimal Timing of Price Changes," NBER Working Papers 2432, National Bureau of Economic Research, Inc.
- Louis Phaneuf, 1990. "Wage Contracts and the Unit Root Hypothesis," Canadian Journal of Economics, Canadian Economics Association, vol. 23(3), pages 580-92, August.
- Eric Maskin & Jean Tirole, 1985. "A Theory of Dynamic Oligopoly, II: Price Competition," Working papers 373, Massachusetts Institute of Technology (MIT), Department of Economics.
- De Fraja, Giovanni, 1993. "Staggered vs. synchronised wage setting in oligopoly," European Economic Review, Elsevier, vol. 37(8), pages 1507-1522, December.
- Laurence Ball & Stephen G. Cecchetti, 1986.
"Imperfect information and staggered price setting,"
Research Working Paper
86-08, Federal Reserve Bank of Kansas City.
- Lach, Saul & Tsiddon, Daniel, 1992. "The Behavior of Prices and Inflation: An Empirical Analysis of Disaggregated Price Data," Journal of Political Economy, University of Chicago Press, vol. 100(2), pages 349-89, April.
- Taylor, John B, 1979. "Staggered Wage Setting in a Macro Model," American Economic Review, American Economic Association, vol. 69(2), pages 108-13, May.
- repec:nbr:nberre:0126 is not listed on IDEAS
- V. V. Chari & Patrick J. Kehoe & Ellen R. McGrattan, 1998.
"Sticky price models of the business cycle: can the contract multiplier solve the persistence problem?,"
217, Federal Reserve Bank of Minneapolis.
- V. V. Chari & Patrick J. Kehoe & Ellen R. McGrattan, 2000. "Sticky Price Models of the Business Cycle: Can the Contract Multiplier Solve the Persistence Problem?," Econometrica, Econometric Society, vol. 68(5), pages 1151-1180, September.
- V. V. Chari & Patrick J. Kehoe & Ellen R. McGrattan, 1996. "Sticky Price Models of the Business Cycle: Can the Contract Multiplier Solve the Persistence Problem?," NBER Working Papers 5809, National Bureau of Economic Research, Inc.
- Parkin, Michael, 1986. "The Output-Inflation Trade-off When Prices Are Costly to Change," Journal of Political Economy, University of Chicago Press, vol. 94(1), pages 200-224, February.
- Taylor, John B, 1980.
"Aggregate Dynamics and Staggered Contracts,"
Journal of Political Economy,
University of Chicago Press, vol. 88(1), pages 1-23, February.
- Caminal, R., 1988. "Inflation And Optimal Price Adjustment Under Monopolistic Competition," UFAE and IAE Working Papers 90.88, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Tsiddon, Daniel, 1993. "The (Mis)Behaviour of the Aggregate Price Level," Review of Economic Studies, Wiley Blackwell, vol. 60(4), pages 889-902, October.
- Caplin, Andrew S & Spulber, Daniel F, 1987.
"Menu Costs and the Neutrality of Money,"
The Quarterly Journal of Economics,
MIT Press, vol. 102(4), pages 703-25, November.
- Olivier J. Blanchard, 1982. "Price Asynchronization and Price Level Inertia," NBER Working Papers 0900, National Bureau of Economic Research, Inc.
- Matsukawa, Shigeru, 1986. "The Equilibrium Distribution of Wage Settlements and Economic Stability," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(2), pages 415-37, June.
- Domberger, Simon & Fiebig, Denzil G, 1993. "The Distribution of Price Changes in Oligopoly," Journal of Industrial Economics, Wiley Blackwell, vol. 41(3), pages 295-313, September.
When requesting a correction, please mention this item's handle: RePEc:oup:restud:v:69:y:2002:i:1:p:97-116. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.