Monetary Persistence, Imperfect Competition, and Staggering Complementarities

Merkl C, Snower D (2009)


Publication Language: English

Publication Type: Journal article

Publication year: 2009

Journal

Publisher: Cambridge University Press (CUP)

Book Volume: 13

Pages Range: 81-106

Journal Issue: 1

DOI: 10.1017/S1365100508070417

Abstract

This paper explores the influence of wage and price staggering on monetary persistence. We show that, for plausible parameter values, wage and price staggering are complementary in generating monetary persistence. We do so by proposing the new measure of “quantitative inertia,” after discussing weaknesses of the “contract multiplier,” a standard measure of monetary persistence. The existence of complementarities means that beyond understanding how wage and price staggering work in isolation, it is important to investigate their interactions. Furthermore, our analysis indicates that the degree of monetary persistence generated by wage vis-à-vis price staggering depends on the relative competitiveness of the labor and product markets. We show that the conventional finding that wage staggering generates more persistence than price staggering holds under homogeneous capital accumulation. Under firm-specific capital, wage staggering generates more persistence only when the labor market is sufficiently competitive relative to the product market.

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How to cite

APA:

Merkl, C., & Snower, D. (2009). Monetary Persistence, Imperfect Competition, and Staggering Complementarities. Macroeconomic Dynamics, 13(1), 81-106. https://doi.org/10.1017/S1365100508070417

MLA:

Merkl, Christian, and Dennis Snower. "Monetary Persistence, Imperfect Competition, and Staggering Complementarities." Macroeconomic Dynamics 13.1 (2009): 81-106.

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