On the Output-Inflation Relationship When Price and Quantity Adjustments are Costly
Research output: Working paper › Research
A vast literature analyzes the real effects of price-adjustment costs assuming that quantity adjustments are costless. In this paper, we analyze whether the presence of quantity-adjustments costs, which presumably are significant, change the traditional results on the impact of inflation. In particular, recent findings suggest that quantity-adjustment costs may remove the linkage between output and inflation. We show that this is not the case when inflation is anticipated. On the contrary, quantity-adjustment costs may significantly amplify the consequences of price-adjustment costs
Original language | English |
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Publisher | University of Munich |
Number of pages | 12 |
Publication status | Published - 2000 |
ID: 45422