Monopolistic Price Adjustment and Aggregate Output
By Julio J. Rotemberg. 2015
677 citations recorded by the source corpus.
This paper studies the consequences for the behaviour of aggregate output of the perception on the part of firms that changing prices is costly. The rational expectations equilibrium of an economy with many such firms is constructed. It is shown that in this economy nominal shocks have a persistent effect on aggregate output. Furthermore, the real wage is demonstrated to move procyclically in such an economy.
Subfields: Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/d1cf14ba9fcbf528d8ff67ab4ec8b153909188b7
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In Economics and Econometrics
- Egon Zakraǰsek
- J. Sim
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Citations in the corpus
- A Theory of Countercyclical Government Multiplier (2014, neutral): “Second, monopolistic firms are subject not to the price-setting friction of Calvo ( 1983 ) but to the quadratic price adjustment cost of Rotemberg ( 1982 ) ; therefore, the Phillips curve admits a different expression.”
- The rebuilding macroeconomic theory project: an analytical assessment (2018, methodology): “This equation follows the work of Fischer (1977), Taylor (1980), and Calvo (1983), and also of Rotemberg (1982).”
- Addressing Household Indebtedness: Monetary, Fiscal or Macroprudential Policy? (2017, neutral): “We specify an exogenous AR(1) process on θp,t = ηy,t/(ηy,t − 1), log θp,t = (1− ρp) log θp + ρp log θp,t−1 + εp,t, (37)”
- Inflation Dynamics During the Financial Crisis (2015, positive): “4 Nominal Price Rigidities and the Phillips Curve To allow for nominal rigidities, we follow Rotemberg (1982) and assume that firms face quadratic adjustment costs when changing nominal prices: γp 2 (”
- Anchored Inflation Expectations (2020, neutral): “As a statistical description of inflation, this final class of models has been studied in a range of contexts, including reduced-form, partial equilibrium and general equilibrium analyses [Smets and Wouters (2003), Stock and Watson (2007), Cogley and Sbordone (2008), Cogley, Primiceri, and Sargent (”