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Article: Predetermined Prices and the Persistent Effects of Money on Output

TitlePredetermined Prices and the Persistent Effects of Money on Output
Authors
KeywordsBusiness and economics
Banking and finance
Issue Date2003
PublisherBlackwell Publishing, Inc.
Citation
Journal of Money, Credit & Banking, 2003, v. 35 n. 5, p. 729-741 How to Cite?
AbstractThis note illustrates a model of predetermined pricing, where firms set a fixed schedule of nominal prices at the time of price readjustment, based on the work of Fischer (1977). This contrasts with the model of fixed pricing, the specification underlying most recent dynamic sticky-price models. It is well known that predetermined pricing cannot generate substantial persistence in the real effects of monetary shocks when prices are set via fixed duration contracts unless the contracts are of long duration. However, we show that with a probabilistic model of price adjustment, a predetermined pricing specification can produce almost as much persistence as the more conventional model of fixed prices, without the assumption of long average contract duration.
Persistent Identifierhttp://hdl.handle.net/10722/48721
ISSN
2015 Impact Factor: 1.356
2015 SCImago Journal Rankings: 1.973

 

DC FieldValueLanguage
dc.contributor.authorDevereux, MBen_HK
dc.contributor.authorYetman, JAen_HK
dc.date.accessioned2008-05-22T04:22:20Z-
dc.date.available2008-05-22T04:22:20Z-
dc.date.issued2003en_HK
dc.identifier.citationJournal of Money, Credit & Banking, 2003, v. 35 n. 5, p. 729-741en_HK
dc.identifier.issn0022-2879en_HK
dc.identifier.urihttp://hdl.handle.net/10722/48721-
dc.description.abstractThis note illustrates a model of predetermined pricing, where firms set a fixed schedule of nominal prices at the time of price readjustment, based on the work of Fischer (1977). This contrasts with the model of fixed pricing, the specification underlying most recent dynamic sticky-price models. It is well known that predetermined pricing cannot generate substantial persistence in the real effects of monetary shocks when prices are set via fixed duration contracts unless the contracts are of long duration. However, we show that with a probabilistic model of price adjustment, a predetermined pricing specification can produce almost as much persistence as the more conventional model of fixed prices, without the assumption of long average contract duration.en_HK
dc.format.extent194074 bytes-
dc.format.extent234412 bytes-
dc.format.mimetypeapplication/pdf-
dc.format.mimetypeapplication/pdf-
dc.languageengen_HK
dc.publisherBlackwell Publishing, Inc.en_HK
dc.rightsCreative Commons: Attribution 3.0 Hong Kong License-
dc.rightsThe definitive version is available at www.blackwell-synergy.comen_HK
dc.subjectBusiness and economicsen_HK
dc.subjectBanking and financeen_HK
dc.titlePredetermined Prices and the Persistent Effects of Money on Outputen_HK
dc.typeArticleen_HK
dc.identifier.openurlhttp://library.hku.hk:4550/resserv?sid=HKU:IR&issn=0022-2879&volume=35&issue=5&spage=729&epage=741&date=2003&atitle=Predetermined+Prices+and+the+Persistent+Effects+of+Money+on+Outputen_HK
dc.identifier.emailYetman, JA: jyetman@econ.hku.hken_HK
dc.description.naturepostprinten_HK
dc.identifier.scopuseid_2-s2.0-0141941747-
dc.identifier.hkuros91352-

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