Second-order approximation to the Rotemberg model around a distorted steady state

Tatiana Damjanovic, Charles Nolan

    Research output: Contribution to journalArticlepeer-review

    4 Citations (Scopus)

    Abstract

    Social welfare objectives are investigated when changing prices is costly (Rotemberg, 1982). A quadratic welfare function is derived, with distorted steady state, implying inflation and output stabilization goals. Economic distortions influence inflation aversion in a way that differs from Calvo models.
    Original languageEnglish
    Pages (from-to)132-135
    Number of pages4
    JournalEconomics Letters
    Volume110
    Issue number2
    Early online date13 Dec 2010
    DOIs
    Publication statusPublished - Feb 2011
    EventRoyal Economic Society 2010 - Surrey, United Kingdom
    Duration: 18 Apr 201020 Apr 2010

    Keywords

    • Calvo vs Rotemberg. Distorted steady state.

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