Chain of Production as a Monetary Propagation Mechanism

Kevin X.D. Huang () and Zheng Liu ()

No 106, Cahiers de recherche CREFE / CREFE Working Papers from CREFE, Université du Québec à Montréal

Abstract: This paper studies a general equilibrium model with multiple stages of production and sticky prices. Working through the input-output relations among industries at different stages and the timing of firms' pricing decisions, the model generates persistent fluctuations in both the inflation rate and aggregate output following a monetary shock. The persistence is larger, the greater the number of production stages. With a sufficient number of stages, the real persistence is arbitrarily large.

Keywords: Chain of Production; Persistence; Monetary Policy (search for similar items in EconPapers)
JEL-codes: E31 E32 E52 (search for similar items in EconPapers)
Date: 1999-06
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Published in Journal of Monetary Economics, 48(2), pp. 437-462, October 2001.

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Related works:
Working Paper: Chain of production as a monetary propagation mechanism (1999)
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