The Analytic Theory of a Monetary Shock

Fernando Alvarez () and Francesco Lippi
Additional contact information
Fernando Alvarez: University of Chicago - Department of Economics; National Bureau of Economic Research (NBER)

No 2021-21, Working Papers from Becker Friedman Institute for Research In Economics

Abstract: We propose an analytical method to analyze the propagation of a once-and-for-all shock in a broad class of sticky price models. The method is based on the eigenvalue- eigenfunction representation of the dynamics of the cross-sectional distribution of firms’ desired adjustments. A key novelty is that, under assumptions that are appropriate for low-inflation economies, we can approximate the whole profile of the impulse response for any moment of interest in response to an aggregate shock (any displacement of the invariant distribution). We present several applications and discuss extensions.

JEL-codes: E5 E50 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2021
New Economics Papers: this item is included in nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Journal Article: The Analytic Theory of a Monetary Shock (2022)
Working Paper: The Analytic Theory of a Monetary Shock (2021)
Working Paper: The Analytic Theory of a Monetary Shock (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:bfi:wpaper:2021-21

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