Does Money Illusion Matter? Reply

Ernst Fehr and Jean-Robert Tyran

American Economic Review, 2014, vol. 104, issue 3, 1063-71

Abstract: The data in Fehr and Tyran (FT, 2001) and Luba Petersen and Abel Winn (PW,2013) show that money illusion plays an important role in nominal price adjustment after a fully anticipated negative monetary shock. Money Illusion affects subjects' expectations, and causes pronounced nominal inertia after a negative shock but much less inertia after a positive shock. Thus PW provide a misleading interpretation both of our and their own data.

JEL-codes: C92 D83 D84 E31 E32 E52 (search for similar items in EconPapers)
Date: 2014
Note: DOI: 10.1257/aer.104.3.1063
References: Add references at CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
http://www.aeaweb.org/articles.php?doi=10.1257/aer.104.3.1063 (application/pdf)
http://www.aeaweb.org/aer/app/10403/20130161_app.pdf (application/pdf)
http://www.aeaweb.org/aer/data/10403/20130161_data.zip (application/zip)
http://www.aeaweb.org/aer/ds/10403/20130161_ds.zip (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
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:aea:aecrev:v:104:y:2014:i:3:p:1063-71

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Review is currently edited by Esther Duflo

More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().