On the Output-Inflation Relationship when Price and Quantity Adjustments are Costly

Leif Danziger () and Claus Thustrup Hansen
Authors registered in the RePEc Author Service: Claus Thustrup Kreiner

No 293, CESifo Working Paper Series from CESifo

Abstract: A vast literature analyzes the real effects of price-adjustment costs assuming that quantity adjustments are costless. In this paper, we analyze whether the presence of quantity-adjustments costs, which presumably are significant, change the traditional results on the impact of inflation. In particular, recent findings suggest that quantity-adjustment costs may remove the linkage between output and inflation. We show that this is not the case when inflation is anticipated. On the contrary, quantity-adjustment costs may significantly amplify the consequences of price-adjustment costs.

Keywords: Output-inflation relationship; menu costs; quantity-adjustment costs (search for similar items in EconPapers)
Date: 2000
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Working Paper: On the Output-Inflation Relationship when Price and Quantity Adjustments are Costly (2000)
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