Aggregation and Optimization with State-Dependent Pricing: A Comment

Vladislav Damjanovic, Charles Nolan

    Research output: Contribution to journalArticlepeer-review

    3 Citations (Scopus)

    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.

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

    Keywords

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

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