Sticky prices and volatile output

• 成果类型: Article
• 署名作者: Ellison, M; Scott, A
• 署名单位: University of London; London Business School; European University Institute
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/S0304-3932(00)00039-8
• 发表日期: 2000
• 页码: 621-632
• 关键词: business cycles; cash in advance; sticky prices

摘要

We examine the effect of introducing a specific type of price stickiness into a stochastic growth model, subject to a cash in advance constraint. As in previous studies, we find the introduction of price rigidities provides a substantial source of monetary non-neutrality which contributes significantly to output volatility. We show that the introduction of this form of sticky prices improves the model's performance at explaining inflation but worsens it for output. The most dramatic failure of the model is the extremely high-frequency fluctuations in output that it generates. Sticky prices not only fail to produce persistent business cycle fluctuations but they generate extreme volatility at very high frequencies. (C) 2000 Elsevier Science B.V. All rights reserved. JEL classification: E31; E32.