EconPapers    
Economics at your fingertips  
 

Optimal monetary policy with endogenous entry and product variety

Florin Bilbiie, Ippei Fujiwara and Fabio Ghironi

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: Deviations from long-run price stability are optimal in the presence of endogenous entry and product variety in a sticky-price model in which price stability would be optimal otherwise Long-run inflation (deflation) is optimal when the benefit of variety to consumers falls short of (exceeds) the market incentive for creating that variety--the desired markup; Price indexation exacerbates this mechanism. Plausible preference specifications and parameter values justify positive long-run inflation rates. However, short-run price stability (around this non-zero trend) is close to optimal, even in the presence of endogenously time-varying desired markups that distort the intertemporal allocation of resources.

Keywords: Entry; Optimal inflation rate; Price stability; Product variety; Ramsey-optimal monetary policy (search for similar items in EconPapers)
Date: 2014-03-14
References: Add references at CitEc
Citations: View citations in EconPapers (93)

Published in Journal of Monetary Economics, 2014, pp.see doi. ⟨10.1016/j.jmoneco.2014.02.006⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Optimal monetary policy with endogenous entry and product variety (2014) Downloads
Working Paper: Optimal monetary policy with endogenous entry and product variety (2014)
Working Paper: Optimal monetary policy with endogenous entry and product variety (2014)
Working Paper: Optimal Monetary Policy with Endogenous Entry and Product Variety (2011) Downloads
Working Paper: Optimal Monetary Policy with Endogenous Entry and Product Variety (2011) Downloads
Working Paper: Optimal Monetary Policy with Endogenous Entry and Product Variety (2011) Downloads
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:hal:cesptp:halshs-00975152

DOI: 10.1016/j.jmoneco.2014.02.006

Access Statistics for this paper

More papers in Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL
Bibliographic data for series maintained by CCSD (hal@ccsd.cnrs.fr).

 
Page updated 2025-03-22
Handle: RePEc:hal:cesptp:halshs-00975152