ANTICIPATED INFLATION AND AGGREGATE EMPLOYMENT: THE CASE OF COSTLY PRICE ADJUSTMENT

Published

Journal Article

Even if inflation is perfectly anticipated, a firm that finds nominal price adjustments sufficiently costly will reset its price at multiā€period intervals. Consequently, its average output will change in a direction that depends on properties of its profit function. On the basis of this observation, which does not involve money illusion, the paper shows that anticipated inflation can stimulate aggregate employment through a process that entails changes in the factor demands of individual monopolistic firms and in the intersectoral allocation of consumer expenditure. Simulations indicate, however, that the gain in aggregate employment is likely to be modest. Copyright © 1986, Wiley Blackwell. All rights reserved

Full Text

Duke Authors

Cited Authors

  • KURAN, T

Published Date

  • January 1, 1986

Published In

Volume / Issue

  • 24 / 2

Start / End Page

  • 293 - 311

Electronic International Standard Serial Number (EISSN)

  • 1465-7295

International Standard Serial Number (ISSN)

  • 0095-2583

Digital Object Identifier (DOI)

  • 10.1111/j.1465-7295.1986.tb01811.x

Citation Source

  • Scopus