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Monetary neutrality in one specific class of DGE model with staggered prices

By Kirill Sosunov

Abstract

In this paper I show that monetary neutrality proposition holds for one specific parameterization of a dynamic general equilibrium model of monopolistic competition even if nominal rigidity in a form of staggered price setting or partial adjustment price-setting mechanism is present in a model. This parameterization is a result of a zero profit condition for intermediate goods producers and it requires that degree of increasing returns in intermediate goods production is equal to price-marginal costs markup

Topics: business cycles, output persistence, nominal rigidities, real rigidities. 1. Introduction
Year: 2011
OAI identifier: oai:CiteSeerX.psu:10.1.1.198.7093
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