The real effects of inflation in continuous versus discrete time sticky price models
We demonstrate the important implications of the assumptions of discrete time in many sticky price models of the macroeconomy. For a given level of menu costs, discrete time models imply longer average contract length but smaller real effects of both trend inflation and monetary shocks than continuous time models. It is also feasible for a firm to enjoy full price flexibility in discrete time, while this would require paying infinite menu costs in continuous time, a distinction that is most important at high levels of trend inflation. Copyright © 2007 John Wiley & Sons, Ltd.
Volume (Year): 28 (2007)
Issue (Month): 6 ()
|Contact details of provider:|| Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/7976|
References listed on IDEAS
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.:
- Devereux, Michael B. & Yetman, James, 2002. "Menu costs and the long-run output-inflation trade-off," Economics Letters, Elsevier, vol. 76(1), pages 95-100, June.
When requesting a correction, please mention this item's handle: RePEc:wly:mgtdec:v:28:y:2007:i:6:p:633-638. 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: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.