Non-Price Competition, Real Rigidities and Inflation Dynamics
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Francesco Turino
This paper studies the implications for inflation dynamics of introducing non-price competition into a New Keynesian model featuring both nominal rigidities, which are in the form of staggered prices, and real rigidities, which are in the form of strategic complementarities in price setting. Under very general assumptions, we show that the presence of non-price competition among firms dampens the overall degree of real rigidities in the economy, thereby increasing the sensitivity of inflation to movements in real marginal costs. Because of this property, our analysis provides additional insights to the existing theories on real rigidities, showing that the strong linkage between real rigidities and the sensitivity of inflation to real marginal costs that has been found in previous works is not robust across alternative assumptions about inter-firms competition.
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
Artikel in diesem Heft
- Topics Article
- Endogenous Growth, Habit Formation and Convergence Speed
- Implementing Optimal Monetary Policy in New-Keynesian Models with Inertia
- Capital Markets Integration and Labor Market Institutions
- The Role of the Real Interest Rate in U.S. Macroeconomic History
- Price Dynamics and Asymmetric Business Cycles under Mixed State and Time Dependent Pricing Rules
- The Link between the Economic Structure and Financial Development
- The Optimum Quantity of Money Revisited: Distortionary Taxation in a Search Model of Money
- Sufficient Conditions for Finite Objective Functions in DSGE Models with Deterministic and Stochastic Trends
- A Neoclassical Analysis of the Asian Crisis: Business Cycle Accounting for a Small Open Economy
- Aging, Retirement, and Savings: A General Equilibrium Analysis
- Non-Price Competition, Real Rigidities and Inflation Dynamics
- Stock Market Uncertainty and Monetary Policy Reaction Functions of the Federal Reserve Bank
- Inflation and Innovation-Driven Growth
- Financial Market Shocks during the Great Depression
- Inventories and Interest Rates: A Stage of Fabrication Approach
- Policy Irreversibility and Interest Rate Smoothing
- The Effect of Loss Experiences in a Banking Crisis on Future Expectations and Behavior
- The Importance of Commitment in the New Keynesian Model
- Relative-Preference Shifts and the Business Cycle
- Contributions Article
- A Model of the Exchange Rate with Informational Frictions
- Communication, Innovation, and Growth
- On-the-Job Search and Labor Market Equilibrium
- Investment-Specific Shocks and Cyclical Fluctuations in a Frictional Labor Market
- An Evaluation of Inflation Forecasts from Surveys Using Real-Time Data
- Public Sector Pension Policies and Capital Accumulation in an Emerging Economy: The Case of Brazil
- Employment Flows with Endogenous Financing Constraints
- Private Equity Returns in a Model of Entrepreneurial Choice with Learning
- Nominal Rigidities, News-Driven Business Cycles, and Monetary Policy
- How Much Can Engel's Law and Baumol's Disease Explain the Rise of Service Employment in the United States?
- Are DSGE Approximating Models Invariant to Shifts in Policy?
- Variable Search Intensity with Coordination Unemployment
- Households Forming Inflation Expectations: Active and Passive Absorption Rates
- Earnings Inequality and the Equity Premium
- Advances Article
- Demystifying the Equity Premium
- Is a Calvo Price Setting Model Consistent with Individual Price Data?
- The Impact of Aggregate and Sectoral Fluctuations on Training Decisions
- On Population Structure and Marriage Dynamics
Artikel in diesem Heft
- Topics Article
- Endogenous Growth, Habit Formation and Convergence Speed
- Implementing Optimal Monetary Policy in New-Keynesian Models with Inertia
- Capital Markets Integration and Labor Market Institutions
- The Role of the Real Interest Rate in U.S. Macroeconomic History
- Price Dynamics and Asymmetric Business Cycles under Mixed State and Time Dependent Pricing Rules
- The Link between the Economic Structure and Financial Development
- The Optimum Quantity of Money Revisited: Distortionary Taxation in a Search Model of Money
- Sufficient Conditions for Finite Objective Functions in DSGE Models with Deterministic and Stochastic Trends
- A Neoclassical Analysis of the Asian Crisis: Business Cycle Accounting for a Small Open Economy
- Aging, Retirement, and Savings: A General Equilibrium Analysis
- Non-Price Competition, Real Rigidities and Inflation Dynamics
- Stock Market Uncertainty and Monetary Policy Reaction Functions of the Federal Reserve Bank
- Inflation and Innovation-Driven Growth
- Financial Market Shocks during the Great Depression
- Inventories and Interest Rates: A Stage of Fabrication Approach
- Policy Irreversibility and Interest Rate Smoothing
- The Effect of Loss Experiences in a Banking Crisis on Future Expectations and Behavior
- The Importance of Commitment in the New Keynesian Model
- Relative-Preference Shifts and the Business Cycle
- Contributions Article
- A Model of the Exchange Rate with Informational Frictions
- Communication, Innovation, and Growth
- On-the-Job Search and Labor Market Equilibrium
- Investment-Specific Shocks and Cyclical Fluctuations in a Frictional Labor Market
- An Evaluation of Inflation Forecasts from Surveys Using Real-Time Data
- Public Sector Pension Policies and Capital Accumulation in an Emerging Economy: The Case of Brazil
- Employment Flows with Endogenous Financing Constraints
- Private Equity Returns in a Model of Entrepreneurial Choice with Learning
- Nominal Rigidities, News-Driven Business Cycles, and Monetary Policy
- How Much Can Engel's Law and Baumol's Disease Explain the Rise of Service Employment in the United States?
- Are DSGE Approximating Models Invariant to Shifts in Policy?
- Variable Search Intensity with Coordination Unemployment
- Households Forming Inflation Expectations: Active and Passive Absorption Rates
- Earnings Inequality and the Equity Premium
- Advances Article
- Demystifying the Equity Premium
- Is a Calvo Price Setting Model Consistent with Individual Price Data?
- The Impact of Aggregate and Sectoral Fluctuations on Training Decisions
- On Population Structure and Marriage Dynamics