Relative Price Distortions and Inflation Persistence
Bibliographic Data
| ID | 9716322 |
|---|---|
| Authors | Tatiana Damjanovic (0000-0001-6158-7982, University of St Andrews), Charles Nolan (University of St Andrews), Charles R Nolan (0000-0002-7260-7472, University of St Andrews) |
| Year | 2010 |
| Volume | 120 |
| Issue | 547 |
| Pages | 1080-1099 |
| Publication date | 2010-09-01 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | The Economic Journal (JOURNAL) |
| Journal identifiers | ISSN: 0013-0133 • E-ISSN: 1468-0297 |
| Publisher | Oxford University Press (OUP) (PUBLISHER) |
| DOI | 10.1111/j.1468-0297.2009.02329.x |
| OpenAlex | W3124971048 |
| Language | EN |
| Citations received | 2 |
| References cited | 17 |
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 linearized 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
Dispersion (optics · Distortion (music · Econometrics · Economics · Inflation (cosmology · Macroeconomics · Monetary economics · Monetary policy · Persistence (discontinuity · Physics · Price dispersion · Price level · Productivity · Relative price · Shock (circulatory · Supply shock · Economic theories and models · Internal Medicine · Italy: Economic History and Contemporary Issues · Monetary Policy and Economic Impact
| Citations per year | 0.14 |
|---|---|
| Citation span | 2012 - 2020 (9) |
| Highly cited | No |