TY - JOUR
T1 - Policy trade-off in the long run
T2 - A new Keynesian model with technological change and money growth
AU - Tsuzuki, Eiji
AU - Inoue, Tomohiro
PY - 2010/9
Y1 - 2010/9
N2 - In this study, we introduce a constant rate of technological change and money growth into the standard new Keynesian model, in which both prices and nominal wages are supposed to be sticky. Using such a model, we examine whether a policy trade-off exists between curbing inflation and stabilizing the welfare-relevant output gap in the steady state. If we take only price stickiness into consideration, a policy trade-off does not occur. However, if both nominal wage stickiness and price stickiness are taken into consideration, a policy trade-off occurs.
AB - In this study, we introduce a constant rate of technological change and money growth into the standard new Keynesian model, in which both prices and nominal wages are supposed to be sticky. Using such a model, we examine whether a policy trade-off exists between curbing inflation and stabilizing the welfare-relevant output gap in the steady state. If we take only price stickiness into consideration, a policy trade-off does not occur. However, if both nominal wage stickiness and price stickiness are taken into consideration, a policy trade-off occurs.
KW - New Keynesian Phillips curve
KW - Nominal rigidities
KW - Welfare-relevant output gap
UR - http://www.scopus.com/inward/record.url?scp=77955050475&partnerID=8YFLogxK
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U2 - 10.1016/j.econmod.2010.05.009
DO - 10.1016/j.econmod.2010.05.009
M3 - Article
AN - SCOPUS:77955050475
SN - 0264-9993
VL - 27
SP - 943
EP - 950
JO - Economic Modelling
JF - Economic Modelling
IS - 5
ER -