Sticky Prices and Indeterminacy

Mark Weder

No 2006-02, School of Economics and Public Policy Working Papers from University of Adelaide, School of Economics and Public Policy

Abstract: The aim of the present paper is to analyze the link between price rigidity and indeterminacy. This is done within a cash-in-advance economy from which we know that it exhibits indeterminacy at high degrees of relative risk aversion. I find that price stickiness reduces the scope of these sunspot equilibria; sluggish price adjustment requires degrees of relative risk aversion compatible with indeterminacy that prove too high to square with data.

Keywords: cash-in-advance economies; Calvo-pricing; sunspot equilibria (search for similar items in EconPapers)
JEL-codes: E31 E32 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2006
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://media.adelaide.edu.au/economics/papers/doc/wp2006-02.pdf (application/pdf)

Related works:
Journal Article: Sticky Prices and Indeterminacy (2008)
Journal Article: Sticky Prices and Indeterminacy (2008)
Working Paper: Sticky Prices and Indeterminacy (2006)
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:adl:wpaper:2006-02

Access Statistics for this paper

More papers in School of Economics and Public Policy Working Papers from University of Adelaide, School of Economics and Public Policy Contact information at EDIRC.
Bibliographic data for series maintained by Qazi Haque ().