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dc.contributor.authorDamjanovic, Tatianaen_GB
dc.contributor.authorNolan, Charlesen_GB
dc.date.accessioned2013-02-18T15:30:37Zen_GB
dc.date.accessioned2013-03-19T15:57:56Z
dc.date.issued2010en_GB
dc.description.abstractMany sticky-price models suggest that relative price distortion is one of the major costs of inflation. We show that this resource misallocation is costly even at quite low rates of inflation. This is because inflation strongly affects price dispersion which in turn has an impact on the economy qualitatively similar to, and of the order of magnitude of, a negative shift in productivity. Similarly, the utility cost of price dispersion is large. We incorporate price dispersion in a linearized model. This radically affects how shocks are transmitted through the economy. Notably, a contractionary nominal shock has a persistent, negative hump-shaped impact on inflation, but may have a positive hump-shaped impact on output. Observed persistence in the policy rate is not due to the policy rule per se.en_GB
dc.identifier.citationVol. 120, Issue 547, pp. 1080 - 1099en_GB
dc.identifier.doi10.1111/j.1468-0297.2009.02329.xen_GB
dc.identifier.urihttp://hdl.handle.net/10036/4320en_GB
dc.language.isoenen_GB
dc.relation.urlhttp://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1468-0297en_GB
dc.relation.urlhttp://ssrn.com/abstract=947234en_GB
dc.subjectPrice stickinessen_GB
dc.subjectoptimal fiscal and monetary policiesen_GB
dc.titleRelative price distortions and inflation persistenceen_GB
dc.typeArticleen_GB
dc.date.available2013-02-18T15:30:37Zen_GB
dc.date.available2013-03-19T15:57:56Z
dc.identifier.issn0013-0133en_GB
dc.descriptionAuthor's pre-print draft dated November 2006 deposited in SSRN archive. Final version published by Wiley; available online at http://onlinelibrary.wiley.com/journal/en_GB
dc.identifier.journalEconomic Journalen_GB


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