Sticky Prices Versus Sticky Information: Does it Matter for Policy Paradoxes?

Gauti Eggertsson and Vaishali Garga

No 23961, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper shows that government spending multiplier at the zero lower bound (ZLB) is larger under sticky information than under sticky prices. Similarly, well known paradoxes, e.g., the paradox of toil and the paradox of flexibility become more severe under sticky information. For the case of sticky information it is important to assume that the fiscal policy intervention coincides with the duration of zero interest rates, while such distinction is less important in some special cases for sticky prices. This allows us to unify and clarify results that may appear to contradict each other in the literature.

JEL-codes: E31 E4 E5 E50 E51 E52 E6 E62 (search for similar items in EconPapers)
Date: 2017-10
New Economics Papers: this item is included in nep-mac
Note: ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published as Gauti B. Eggertsson & Vaishali Garga, 2018. "Sticky prices versus sticky information: Does it matter for policy paradoxes?," Review of Economic Dynamics, .

Downloads: (external link)
http://www.nber.org/papers/w23961.pdf (application/pdf)

Related works:
Journal Article: Sticky Prices versus Sticky Information: Does it Matter for Policy Paradoxes? (2019)
Working Paper: Sticky Prices versus Sticky Information: Does It Matter For Policy Paradoxes? (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:23961

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w23961

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().