Time consistent monetary policy with endogenous price rigidity

Journal of Economic Theory

Volumn 138, Issue 1, 2008, Pages 184-210

  Siu, Henry E ^a  

^a UNIVERSITY OF BRITISH COLUMBIA   (Canada)

Author keywords

Discretion; Expectation traps; Markov equilibrium; Multiple equilibria; State dependent pricing; Sticky prices; Time consistency

Indexed keywords

EID: 37349047872     PISSN: 00220531     EISSN: 10957235     Source Type: Journal    
DOI: 10.1016/j.jet.2007.06.009     Document Type: Article

References (25)

1. Albanesi S., Chari V.V., and Christiano L.J. How severe is the time inconsistency problem in monetary policy?. In: Dewatripont M., Hansen L.P., and Turnovsky S.J. (Eds). Advances in Economics and Econometrics (2003), Cambridge University Press, Cambridge 123-150
2. Albanesi S., Chari V.V., and Christiano L.J. Expectation traps and monetary policy. Rev. Econ. Stud. 70 (2003) 715-741
3. Ball L., and Romer D. Sticky prices as coordination failure. Amer. Econ. Rev. 81 (1991) 539-552
4. Barro R.J., and Gordon D.B. A positive theory of monetary policy in a natural rate model. J. Polit. Economy 91 (1983) 589-610
5. Barseghyan L., and Di Cecio R. Optimal monetary policy, endogenous sticky prices, and multiple equilibria. B.E. Press Topics in Macroeconomics 7 (2007) Article 8
6. Basu S., and Fernald J.G. Returns to scale in U.S. production: Estimates and implications. J. Polit. Economy 105 (1997) 249-283
7. Chari V.V., Christiano L.J., and Eichenbaum M. Expectation traps and discretion. J. Econ. Theory 81 (1998) 462-492
8. Chari V.V., and Kehoe P.J. Sustainable plans. J. Polit. Economy 98 (1990) 783-802
9. Chari V.V., Kehoe P.J., and McGrattan E.R. Sticky price models of the business cycle: Can the contract multiplier solve the persistence problem?. Econometrica 68 (2000) 1151-1179
10. Christiano L.J., Eichenbaum M., and Evans C.L. Nominal rigidities and the dynamic effects of a shock to monetary policy. J. Polit. Economy 113 (2005) 1-45
11. Cooley T.F., and Hansen G.D. The inflation tax in a real business cycle model. Amer. Econ. Rev. 79 (1989) 733-748
12. Cooper R., and John A. Coordinating coordination failures in keynesian models. Quart. J. Econ. 103 (1988) 441-463
13. Devereux M.B., and Siu H.E. State dependent pricing and business cycle asymmetries. Int. Econ. Rev. 48 (2007) 281-310
14. Dotsey M., King R.G., and Wolman A.L. State-dependent pricing and the general equilibrium dynamics of money and output. Quart. J. Econ. 114 (1999) 655-690
15. Ireland P.N. Sustainable monetary policies. J. Econ. Dynam. Control 22 (1997) 87-108
16. Ireland P.N. Expectations, credibility, and time-consistent monetary policy. Macroecon. Dynam. 4 (2000) 448-466
17. King R.G., and Wolman A.L. What should the monetary authority do when prices are sticky?. In: Taylor J. (Ed). Monetary Policy Rules (1999), Chicago University Press, Chicago 349-398
18. King R.G., and Wolman A.L. Monetary discretion, pricing complementarity, and dynamic multiple equilibria. Quart. J. Econ. 119 (2004) 1513-1553
19. Klein P., Krusell P., and Ríos-Rull J.V. Time-consistent public expenditures, mimeo (2006), University of Western Ontario
20. Kydland F.E., and Prescott E.C. Rules rather than discretion: The inconsistency of optimal plans. J. Polit. Economy 85 (1977) 473-492
21. Lucas Jr. R.E. Interest rates and currency prices in a two-country world. J. Monet. Econ. 10 (1982) 335-359
22. Romer D. Advanced Macroeconomics. second ed. (2001), McGraw-Hill, New York
23. Svensson L.E.O. Money and asset prices in a cash-in-advance economy. J. Polit. Economy 93 (1985) 919-944
24. Taylor J.B. Aggregate dynamics and staggered contracts. J. Polit. Economy 88 (1980) 1-23
25. Zbaracki M.J., Ritson M., Levy D., Dutta S., and Bergen M. Managerial and customer costs of price adjustment: direct evidence from industrial markets. Rev. Econ. Statist. 86 (2004) 514-533