haku: @author Canning, D. / yhteensä: 5
viite: 5 / 5
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| Tekijä: | Canning, D. |
| Otsikko: | Monetary policy versus wage adjustment as a response to demand shocks. |
| Lehti: | Economic Journal
1988 : VOL. 98:390, p. CONFERENCE PAPERS, SUPPL. , p. 75-82 |
| Asiasana: | MONETARY POLICY DEMAND PRICE LEVEL UNEMPLOYMENT MACROECONOMIC MODELS |
| Kieli: | eng |
| Tiivistelmä: | One of the central questions in macroeconomic theory is whether aggregate demand shocks are best dealt with by government intervention or by price flexibility. A model is developed to examine the effectiveness of price flexibility and monetary policy where neither price makers nor the monetary authorities can react instantaneously to shocks. The simple framework clarifies the forces at work and allows direct welfare comparisons between adjustment rules. Quick monetary policy aimed at full employment is shown to Pareto dominate a slow response. Some other aspects of a quick and a slow response are compared too. By means of an inflation tax wage price setters can be motivated to minimize government action. |
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