David Domeij (Stockholm), 23.11.2022
We introduce price posting and information frictions into a
canonical monetary macro model. Despite costless price
adjustment, insufficient search incentives prevent market clearing.
The model has an interval of steady-state price levels. Under
successful inflation-targeting, the equilibrium price level is selected
by past shocks and policies. If a negative supply shock makes the
current price level unsustainable, both prices and mark-ups
immediately rise. Absent expansionary monetary or fiscal policy, the
higher mark-up persists even if the shock subsides.
canonical monetary macro model. Despite costless price
adjustment, insufficient search incentives prevent market clearing.
The model has an interval of steady-state price levels. Under
successful inflation-targeting, the equilibrium price level is selected
by past shocks and policies. If a negative supply shock makes the
current price level unsustainable, both prices and mark-ups
immediately rise. Absent expansionary monetary or fiscal policy, the
higher mark-up persists even if the shock subsides.
Time
Wednesday, 23.11.22 - 12:15 PM
- 01:30 PM
Topic
"Price Posting and Sticky Prices: A Monetary Macro Mode"
Location
Juridicum, Adenauerallee 24-42
Room
Faculty Room
Reservation
not required
Organizer
Institute for Macroeconomics and Econometrics
Contact