EconPapers    
Economics at your fingertips  
 

Inefficient Relative Price Fluctuations

Daeha Cho and Kwang Hwan Kim
Additional contact information
Daeha Cho: University of Mellbourne
Kwang Hwan Kim: Yonsei Univ

No 2020rwp-171, Working papers from Yonsei University, Yonsei Economics Research Institute

Abstract: We measure inefficient fluctuations in the relative price of investment in the US using an estimated two-sector New Keynesian model. In the presence of these fluctuations, we find that monetary policy faces a quantitatively significant trade-off among the sectoral output gaps and the sectoral price and wage inflation rates. While optimal monetary policy is effective in stabilizing the sectoral inflation rates, it has a limited effect on stabilizing the sectoral output gaps.

Keywords: Relative price of investment; Policy trade-off; Optimal monetary policy (search for similar items in EconPapers)
JEL-codes: E32 E58 E61 (search for similar items in EconPapers)
Pages: 38pages
Date: 2020-03
New Economics Papers: this item is included in nep-cba, nep-dge, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
ftp://165.132.78.176/repec/yon/wpaper/2020rwp-171.pdf (application/pdf)

Related works:
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:yon:wpaper:2020rwp-171

Access Statistics for this paper

More papers in Working papers from Yonsei University, Yonsei Economics Research Institute Contact information at EDIRC.
Bibliographic data for series maintained by YERI ().

 
Page updated 2021-10-13
Handle: RePEc:yon:wpaper:2020rwp-171