Publication: Sticky Information Versus Sticky Prices: A Proposal to Replace the New Keynesian Phillips Curve
Open/View Files
Date
2002
Authors
Published Version
Journal Title
Journal ISSN
Volume Title
Publisher
Massachusetts Institute of Technology Press
The Harvard community has made this article openly available. Please share how this access benefits you.
Citation
Mankiw, N. Gregory, and Ricardo Reis. 2002. Sticky information versus sticky prices: A proposal to replace the new Keynesian Phillips curve. Quarterly Journal of Economics 117(4): 1295-1328.
Research Data
Abstract
This paper examines a model of dynamic price adjustment based on the assumption that information disseminates slowly throughout the population. Compared with the commonly used sticky-price model, this sticky-information model displays three related properties that are more consistent with accepted views about the effects of monetary policy. First, disinflations are always contractionary (although announced disinflations are less contractionary than surprise ones). Second, monetary policy shocks have their maximum impact on inflation with a substantial delay. Third, the change in inflation is positively correlated with the level of economic activity.
Description
Other Available Sources
Keywords
Terms of Use
This article is made available under the terms and conditions applicable to Other Posted Material (LAA), as set forth at Terms of Service