Second-order approximation to the Rotemberg model around a distorted steady state

Tatiana Damjanovic () and Charles Nolan

Economics Letters, 2011, vol. 110, issue 2, 132-135

Abstract: Social welfare objectives are investigated when changing prices is costly (Rotemberg, 1982). A quadratic welfare function is derived, with a distorted steady state, implying inflation and output stabilization goals. Economic distortions influence inflation aversion in a way that differs from Calvo models.

Keywords: Price; stickiness; Rotemberg; model; Costly; price; adjustment (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (5)

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Working Paper: Second-Order Approximation to the Rotemberg Model around a Distorted Steady State (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:110:y:2011:i:2:p:132-135

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