Monetary Policy Rules, Real Rigidity and Endogenous Persistence

George Bratsiotis () and Christopher Martin

Economics and Finance Discussion Papers from Economics and Finance Section, School of Social Sciences, Brunel University

Abstract: The bulk of literature on real rigidity attempts to identify sources of real rigidity in market imperfections while assuming that the money supply is exogenously set. This paper shows that monetary policy preferences affect the responsiveness of marginal cost to output and through this channel they are shown to determine (i) the degree of real rigidity and (ii) the degree of endogenous persistence. We find that substantial levels of real rigidity and persistence can be generated using plausible parameters values, without relying on market imperfections or other sources of real rigidity.

Pages: 25 pages
Date: 2003-11
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Related works:
Working Paper: Monetary Policy Rules, Real Rigidity and Endogenous Persistence (2003)
Working Paper: Monetary Policy Rules, Real Rigidity and Endogenous Persistence (2003)
Working Paper: Monetary Policy Rules, Real Rigidity and Endogenous Persistence (2002)
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