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

Damjanovic, T. and Nolan, C. (2011) Second-order approximation to the Rotemberg model around a distorted steady state. Economics Letters, 110(2), pp. 132-135. (doi: 10.1016/j.econlet.2010.11.010)

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Publisher's URL: http://dx.doi.org/10.1016/j.econlet.2010.11.010

Abstract

Social welfare objectives are investigated when changing prices is costly (Rotemberg, 1982). A quadratic welfare function is derived, with a distorted steady state, implying inflation and output stabilization goals. Economic distortions influence inflation aversion in a way that differs from Calvo models.

Item Type:Articles
Status:Published
Refereed:Yes
Glasgow Author(s) Enlighten ID:Nolan, Professor Charles
Authors: Damjanovic, T., and Nolan, C.
College/School:College of Social Sciences > Adam Smith Business School > Economics
Journal Name:Economics Letters
Publisher:Elsevier
ISSN:0165-1765
ISSN (Online):1873-7374

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