Accommodation and Fluctuations

Steven Ambler () and L. Phaneuf

Cahiers de recherche from Universite de Montreal, Departement de sciences economiques

Abstract: This Paper Show Monetary Policy Rules That Partially Accommodate Price Increases Can Worsen Both Price and Output Variability, Contrary to the Conventional Wisdom of Models with Staggered Contracts and Rational Expectations. This Phenomenon Is of Particular Interest Given Evidence From a Sample of Twelve Countries That Shows That Prior to the 1973 Oil Price Shock There Seems to Have Been a Positive Relationship Between Price and Output Variability.

Keywords: Monetary Policy; Contracts; Business Cycles (search for similar items in EconPapers)
Pages: 20P pages
Date: 1987
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Persistent link: https://EconPapers.repec.org/RePEc:mtl:montde:8726

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