Is increased price flexibility stabilizing? Redux

• 成果类型: Article
• 署名作者: Bhattarai, Saroj; Eggertsson, Gauti B.; Schoenle, Raphael
• 署名单位: University of Texas System; University of Texas Austin; Brown University; Brandeis University
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2018.07.006
• 发表日期: 2018
• 页码: 66-82
• 关键词: Increased price flexibility; Aggregate volatility; Systematic monetary policy; DSGE model; Bayesian estimation

摘要

What are the implications of increased price flexibility on output volatility? In a simple DSGE model, we show analytically that more flexible prices always amplify output volatility for supply shocks and also amplify output volatility for demand shocks if monetary policy does not respond strongly to inflation. More flexible prices often reduce welfare, even under optimal monetary policy if full efficiency cannot be attained. Our results extend to a model with both sticky information and wages. We estimate a quantitative DSGE model using Bayesian methods and using counterfactual experiments show that our results from the simple model continue to apply. (C) 2018 Elsevier B.V. All rights reserved.