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Danziger, Leif
Hansen, Claus Thustrup
Year of Publication: 
Series/Report no.: 
CESifo Working Paper No. 293
A vast literature analyzes the real effects of price-adjustment costs assuming that quantity adjustments are costless. In this paper, we analyze whether the presence of quantity-adjustments costs, which presumably are significant, change the traditional results on the impact of inflation. In particular, recent findings suggest that quantity-adjustment costs may remove the linkage between output and inflation. We show that this is not the case when inflation is anticipated. On the contrary, quantity-adjustment costs may significantly amplify the consequences of price-adjustment costs.
Output-inflation relationship
menu costs
quantity-adjustment costs
Document Type: 
Working Paper

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