The uniqueness of steady-state equilibrium under state-dependent pricing: The case of deflation

Shuhei Takahashi

Economics Letters, 2021, vol. 209, issue C

Abstract: John and Wolman (2004, 2008) show that steady-state equilibrium is likely to be unique under inflation (i.e., a positive net inflation rate) in a New Keynesian state-dependent pricing model based on the Dotsey et al. (1999) model. I show that the uniqueness of equilibrium holds in a stronger way under deflation (i.e., a negative net inflation rate).

Keywords: State-dependent price setting; New Keynesian model; Multiple equilibria; Strategic complementarity; Deflation (search for similar items in EconPapers)
JEL-codes: E31 E32 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:209:y:2021:i:c:s0165176521004134

DOI: 10.1016/j.econlet.2021.110136

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