Policy trade-off in the long run: A new Keynesian model with technological change and money growth

Eiji Tsuzuki, Tomohiro Inoue

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

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.

Original languageEnglish
Pages (from-to)943-950
Number of pages8
JournalEconomic Modelling
Volume27
Issue number5
DOIs
Publication statusPublished - 2010 Sep

Fingerprint

Technological change
Trade-offs
Money growth
New Keynesian model
Price stickiness
Output gap
Wages
Wage stickiness
Inflation

Keywords

  • New Keynesian Phillips curve
  • Nominal rigidities
  • Welfare-relevant output gap

ASJC Scopus subject areas

  • Economics and Econometrics

Cite this

Policy trade-off in the long run : A new Keynesian model with technological change and money growth. / Tsuzuki, Eiji; Inoue, Tomohiro.

In: Economic Modelling, Vol. 27, No. 5, 09.2010, p. 943-950.

Research output: Contribution to journalArticle

Tsuzuki, Eiji ; Inoue, Tomohiro. / Policy trade-off in the long run : A new Keynesian model with technological change and money growth. In: Economic Modelling. 2010 ; Vol. 27, No. 5. pp. 943-950.
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