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Aggregation and Optimization with State-Dependent Pricing: A Comment

Research output: Contribution to journalArticle

Author(s)

Vladislav Damjanovic, Charles Nolan

School/Research organisations

Abstract

A key argument in Caplin and Leahy (1997) states that the correlation between monetary shocks and output is falling in the variance of the money supply. We demonstrate that this conclusion depends on solving for the correlation in the nonstationary state of the model. In the stationary state, that correlation is initially rising.

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Details

Original languageEnglish
Pages (from-to)565-573
Number of pages9
JournalEconometrica
Volume74
Issue number2
DOIs
Publication statusPublished - Mar 2006

    Research areas

  • (S, s) pricing, money-output correlations, macroeconomic dynamics, OUTPUT

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