Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/230447
Authors: 
Le, Vo Phuong Mai
Meenagh, David
Minford, Patrick
Year of Publication: 
2019
Series/Report no.: 
Cardiff Economics Working Papers No. E2019/15
Abstract: 
Strong evidence now exists both in macro and micro data that price/wage durations are depent on the state of the economy and especially inflation. We embed this dependence in a macro model of the US that otherwise does well in matching the economy's behaviour in the last three decades; it now also matches it over the whole post-war period. This finding implies a major role for monetary policy in influencing the economy's price stickiness. We find that by targetin nominal GDP monetary policy can achieve high price stability while also preventing large cyclical output fluctuations.
Subjects: 
state-dependence
New Keynesian
Rational Expectations crises
price stability
nominal GDP
JEL: 
E2
E3
Document Type: 
Working Paper

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