search query: @author Danziger, L. / total: 6
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| Author: | Danziger, L. |
| Title: | A dynamic economy with costly price adjustments |
| Journal: | American Economic Review
1999 : SEP, VOL. 89:4, p. 878-901 |
| Index terms: | ECONOMICS USA PRICES |
| Language: | eng |
| Abstract: | This paper studies a general-equilibrium model of a dynamic economy with menu costs. Each firm's productivity is exposed to idiosyncratic and aggregate productivity shocks around a trend, and the money supply to monetary shocks around a trend. All compensation, pricing, and production decisions are based on optimizing behavior. There exists a staggered Markov perfect equilibrium with prices determined by a two-sided (s,S) markup strategy. The paper analyzes the optimal markup strategy and investigates the dynamics of the price index and the aggregate output. |
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