Price Rigidity: Causes and Macroeconomic Implications

Price Rigidity: Causes and Macroeconomic Implications

by Torben M. Andersen, Northam Anderson
     
 

ISBN-10: 0198287607

ISBN-13: 9780198287605

Pub. Date: 08/28/1996

Publisher: Oxford University Press, USA

The price adjustment process is crucial to almost any macroeconomic issue. Current macroeconomic literature features widely different models ranking from instantaneous price adjustment to completely rigid prices. Professor Andersen provides a comprehensive analysis of reasons why prices may fail to adjust instantaneously to changes in market conditions. This unified…  See more details below

Overview

The price adjustment process is crucial to almost any macroeconomic issue. Current macroeconomic literature features widely different models ranking from instantaneous price adjustment to completely rigid prices. Professor Andersen provides a comprehensive analysis of reasons why prices may fail to adjust instantaneously to changes in market conditions. This unified treatment will allow the reader to understand the mechanisms at work without becoming lost in technical details. This volume covers both real and nominal price rigidities and integrates existing results from the literature with new results on causes for failures of price adjustment. The analysis of real price rigidities includes inventories, customer markets, search and collusive behaviour. Due to the focus on macroeconomic implications, the analysis of nominal price rigidities is extensive and includes menu costs, informational problems, asynchronized price setting as well as the interaction between price and wage setting. Professor Andersen's own theoretical work on imperfect information, a prime source of price and wage rigidity, is given prominence in the book. The volume is thus a combination of a valuable survey of the literature, and an original expression of future possible research avenues.

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Product Details

ISBN-13:
9780198287605
Publisher:
Oxford University Press, USA
Publication date:
08/28/1996
Edition description:
New Edition
Pages:
200
Product dimensions:
5.63(w) x 8.75(h) x 0.77(d)

Table of Contents

1Introduction1
2Empirical Evidence14
3Imperfect Competition and Price Adjustment29
4Real Price Rigidity48
5Menu Costs70
6Imperfect Information100
7Asynchronization126
8Price-Wage Interactions140
9What have we learned?162
References166
Index179

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