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Staggered Price Setting with Endogenous Frequency of Adjustment

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  • David Romer

Abstract

The classic models of staggered adjustment of Taylor and Blanchard takes the frequency of price or wage adjustment as exogenous. This paper develops a model in which the frequency of price changes in endogenous. It then uses the model to analyze the effects of changes in the parameters of the economy on the frequency of adjustment and the real effects of monetary shocks.

Suggested Citation

  • David Romer, 1989. "Staggered Price Setting with Endogenous Frequency of Adjustment," NBER Working Papers 3134, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:3134
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    References listed on IDEAS

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    1. Benabou, Roland, 1989. "Optimal Price Dynamics and Speculation with a Storable Good," Econometrica, Econometric Society, vol. 57(1), pages 41-80, January.
    2. Laurence Ball & David Romer, 1989. "The Equilibrium and Optimal Timing of Price Changes," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 56(2), pages 179-198.
    3. Ball, Laurence Markham, 1987. "Externalities from Contract Length," American Economic Review, American Economic Association, vol. 77(4), pages 615-629, September.
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