Some Macroeconomic Implications of Price Stickiness

David Laidler

The Manchester School of Economic & Social Studies, 1988, vol. 56, issue 1, 37-54

Abstract: A simple macro model incorporating a little price stickiness is compared to a basic new-classical model. It is argued that the former system, while still yielding standard policy ineffectiveness results, more easily explains persistence in fluctuations in real variables, notably real balances, without being more complicated. It is also shown that these results do not depend upon the model's analytic simplicity but also occur in a more complex formulation. A sticky-price model therefore should be taken seriously as embodying a viable alternative to new-classical macroeconomics. Copyright 1988 by Blackwell Publishers Ltd and The Victoria University of Manchester

Date: 1988
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Persistent link: https://EconPapers.repec.org/RePEc:bla:manch2:v:56:y:1988:i:1:p:37-54

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