Macroeconomic implications of relative price distortions: Seigniorage, output and welfare∗
نویسندگان
چکیده
We compare macroeconomic models of sticky-prices (Calvo and Costsof-adjustment) with flexible price models in terms of optimal seigniorage. This sheds light on the importance of relative price distortions. Sticky-price models with no price dispersion terms have unattractive implications, we argue, when it comes to the derivation of optimal policies. We provide examples where they may imply very high inflation as part of the optimal plan, or that inflation does not matter for the ranking of alternatove policies. JEL Classification: E4; E52; E61; E63.
منابع مشابه
The Effects of Oil Price Movement on Nigerian Macroeconomic Variables: Evidence from Linear near and Nonlinear ARDL Modelling
T he study seeks to investigate both linear and nonlinear effects of oil price movement on critical macroeconomic variables (output, price and exchange rate) in Nigeria using ARDL modeling approach. Previous studies substantially relied on linear methods using VAR approach to unravel this links without a clear conclusion. In an attempt to seek better results in this study, we employ both l...
متن کاملOil Shocks and Macroeconomic Adjustment: a DSGE modeling approach for the Case of Libya, 1970â2007
Libya experienced a substantial increase in oil revenue as a result of increased oil prices during the period of the late 1970s and early 1980s, and again after 2000. Recent increases in oil production and the price of oil, and their positive and negative macroeconomic impacts upon key macroeconomic variables, are of considerable contemporary importance to an oil dependent economy such as that...
متن کاملAn Analysis of Economic Implications of the UK Leaving the EU
W hether the United Kingdom (UK) should remain in the European Union (EU) or not has been a fiercely debated issue both before and after the referendum in the UK on June 23, 2016. The main purpose of this paper is to evaluate the pros and cons of the UK leaving the EU. It is concluded that if the UK leaves the EU, the resulting economic shock would risk adverse effects on macroecono...
متن کاملDevelopment, Volatility and Intertemporal Distortions
Why is macroeconomic volatility in poor countries so much higher than in rich countries? And to what extent can policy improve welfare by mitigating this volatility? In this paper I evaluate the extent to which frictions in financial markets generate more volatile macroeconomic outcomes in poor countries. I motivate my focus on financial frictions with a business cycle accounting exercise using...
متن کاملSome Welfare Effects of Inflation
This paper examines the effects of inflation on the efficiency of the price system, output and welfare, through a model of monopolistic competition with consumer search and (S,s) price setting. Its results have relevance for both search theory and macroeconomics. In particular, it provides a foundation for the conventional wisdom linking higher inflation, through increased price dispersion, to ...
متن کامل