On inflation and output with costly price changes: a simple unifying result.
An analysis was conducted of inflation's effect on the average output of monopolistic firms facing fixed costs of changing their nominal price. Through the use of Taylor expansions, a closed-form solution is derived that is applicable to any specification. This very simple formula permits the eval...
| Publicado en: | American Economic Review Vol. 84; pp. 290 - 298 |
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| Autores principales: | , |
| Formato: | Artículo |
| Publicado: |
American Economic Association
March 1994
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| Materias: | |
| Acceso en línea: | Ver este registro en EBSCOhost |
| Sumario: | An analysis was conducted of inflation's effect on the average output of monopolistic firms facing fixed costs of changing their nominal price. Through the use of Taylor expansions, a closed-form solution is derived that is applicable to any specification. This very simple formula permits the evaluation of the relative impacts of the three factors affecting the inflation-output trade-off: the asymmetry of the profit function, the convexity of the demand function, and discounting. These effects are important components of all general equilibrium models with (s, S) pricing. |
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