Monopolistic Competition, Aggregate Demand Externalities and Real Effects of Nominal Money

Olivier Blanchard and Nobuhiro Kiyotaki

No 1770, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: A long standing issue in macroeconomics is that of the relation of imperfect competition to fluctuations in output. In this paper we examine the relation between monopolistic competition and the role of aggregate demand in the determination of output. We first show that monopolistically competitive economies exhibit an aggregate demand externality. We then show that, because of this externality, small menu costs, that is small costs of changing prices may lead to large effects of aggregate demand on output and on welfare.

Date: 1985-12
Note: EFG
References: Add references at CitEc
Citations: View citations in EconPapers (16)

Published as Blanchard, Olivier and Nobuhiro Kiyotaki. "Monopolistic Competition and the Effects of Aggregate Demand," American Economic Review, Vol. 77, No. 4, September 1987, pp. 647-666.

Downloads: (external link)
http://www.nber.org/papers/w1770.pdf (application/pdf)

Related works:
Working Paper: Monopolistic Competition, Aggregate Demand Externalities and Real Effects Of Nominal Money (1985)
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:nbr:nberwo:1770

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w1770

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().