Predetermined Prices and the Persistent Effects of Money on Output
This note illustrates a model of predetermined pricing, where firms set a fixed schedule of nominal prices at the time of price readjustment, based on the work of Fischer (1977). This contrasts with the model of fixed pricing, the specification underlying most recent dynamic sticky-price models. It...
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| Veröffentlicht in: | Journal of money, credit and banking credit and banking, 2003-10, Vol.35 (5), p.729-741 |
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| container_title | Journal of money, credit and banking |
| container_volume | 35 |
| creator | Devereux, Michael B. Yetman, James |
| description | This note illustrates a model of predetermined pricing, where firms set a fixed schedule of nominal prices at the time of price readjustment, based on the work of Fischer (1977). This contrasts with the model of fixed pricing, the specification underlying most recent dynamic sticky-price models. It is well known that predetermined pricing cannot generate substantial persistence in the real effects of monetary shocks when prices are set via fixed duration contracts unless the contracts are of long duration. However, we show that with a probabilistic model of price adjustment, a predetermined pricing specification can produce almost as much persistence as the more conventional model of fixed prices, without the assumption of long average contract duration. |
| doi_str_mv | 10.1353/mcb.2003.0035 |
| format | Article |
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However, we show that with a probabilistic model of price adjustment, a predetermined pricing specification can produce almost as much persistence as the more conventional model of fixed prices, without the assumption of long average contract duration.</description><identifier>ISSN: 0022-2879</identifier><identifier>ISSN: 1538-4616</identifier><identifier>EISSN: 1538-4616</identifier><identifier>DOI: 10.1353/mcb.2003.0035</identifier><identifier>CODEN: JMCBBT</identifier><language>eng</language><publisher>Columbus: Ohio State University Press</publisher><subject>Bank credit ; Banking system ; Costs ; Credit ; Decision making ; Economic models ; Economic theory ; Finance ; Financial services ; Fixed prices ; Industrial productivity ; Marginal costs ; Menu costs ; Monetary economics ; Money ; Nominal prices ; Output rate ; Price level changes ; Price levels ; Price shocks ; Prices ; Pricing policies ; Probability ; Productivity ; Profits ; Real rigidities</subject><ispartof>Journal of money, credit and banking, 2003-10, Vol.35 (5), p.729-741</ispartof><rights>Copyright 2003 The Ohio State University Press</rights><rights>Copyright © 2003 The Ohio State University.</rights><rights>COPYRIGHT 2003 John Wiley & Sons, Inc.</rights><rights>COPYRIGHT 2003 John Wiley & Sons, Inc.</rights><rights>Copyright Ohio State University Press Oct 2003</rights><lds50>peer_reviewed</lds50><oa>free_for_read</oa><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c642t-454239fbd877f066987f7c27804ea86cbc36d33ad73b8394b4f79ea32724e63e3</citedby></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><linktopdf>$$Uhttps://www.jstor.org/stable/pdf/3649825$$EPDF$$P50$$Gjstor$$H</linktopdf><linktohtml>$$Uhttps://www.jstor.org/stable/3649825$$EHTML$$P50$$Gjstor$$H</linktohtml><link.rule.ids>314,780,784,803,27923,27924,58016,58249</link.rule.ids></links><search><creatorcontrib>Devereux, Michael B.</creatorcontrib><creatorcontrib>Yetman, James</creatorcontrib><title>Predetermined Prices and the Persistent Effects of Money on Output</title><title>Journal of money, credit and banking</title><addtitle>Journal of Money, Credit & Banking</addtitle><description>This note illustrates a model of predetermined pricing, where firms set a fixed schedule of nominal prices at the time of price readjustment, based on the work of Fischer (1977). 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| subjects | Bank credit Banking system Costs Credit Decision making Economic models Economic theory Finance Financial services Fixed prices Industrial productivity Marginal costs Menu costs Monetary economics Money Nominal prices Output rate Price level changes Price levels Price shocks Prices Pricing policies Probability Productivity Profits Real rigidities |
| title | Predetermined Prices and the Persistent Effects of Money on Output |
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