On Inflation and Output with Costly Price Changes: A Simple Unifying Result

Roland Benabou and Jerzy Konieczny

No 135, NBER Technical Working Papers from National Bureau of Economic Research, Inc

Abstract: We analyze the effect of inflation on the average output of monopolistic firms facing a small fixed cost of changing nominal prices. Using Taylor expansions, we derive a general closed-form solution for the slope of the long-run Phillips curve. This very simple, unifying formula allows us to evaluate and clarify the role of three key factors: the asymmetry of the profit function, the convexity of the demand function, and the discount rate. These partial equilibrium effects remain important components of any general equilibrium model with (s,S) pricing.

JEL-codes: B22 E31 (search for similar items in EconPapers)
Date: 1993-05
Note: EFG
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published as American Economic Review, vol.84, March 1994, pp.290-297.

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Related works:
Journal Article: On Inflation and Output with Costly Price Changes: A Simple Unifying Result (1994)
Working Paper: On Inflation and Output with CostlyPrice Changes: A Simple Unifying Result (1991)
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