Relative Price Distortions and Inflation Persistence

• 成果类型: Article
• 署名作者: Damjanovic, Tatiana; Nolan, Charles
• 署名单位: University of St Andrews
• 刊物名称: ECONOMIC JOURNAL
• ISSN/ISSBN: 0013-0133
• DOI: 10.1111/j.1468-0297.2009.02329.x
• 发表日期: 2010
• 页码: 1080-1099
• 关键词: optimal monetary-policy; trend inflation; staggered prices; dispersion

摘要

Sticky-price models often suggest that relative price distortion is a major cost of inflation. We provide an intuition for this: Even at low rates, inflation strongly affects price dispersion which in turn has an impact on the economy qualitatively similar to, and of the order of magnitude of, a negative shift in productivity. The utility cost of price dispersion is quantified and its impact on optimal monetary policy discussed. Price dispersion is incorporated into a linearised model. Strikingly, a contractionary nominal shock has a persistent, negative hump-shaped impact on inflation but may have a positive hump-shaped impact on output.