"There is some price stickiness
because of the supply chain constraint.
In this section, I demonstrate that when the exchange rate changes by the same magnitude as the BAT--that is, [epsilon]'/[epsilon] = (1 - [tau])--then two forms of price stickiness
, namely, producer currency pricing and local currency pricing, maintain neutrality, while a third, dollar currency pricing, which arguably is a more realistic description of price stickiness
in international trade, leads to a breakdown of neutrality.
If the adjustment in the prices of goods and services is slow due to price stickiness
or other frictions, the fall in the relative price of non-traded goods would take place gradually.
They find that the aggregate inflation dynamics are mainly determined by the inflation dynamics of the durable goods sector, irrelevant of its size and price stickiness
. One puzzle that they encountered is that output in different sectors is negatively correlated in response to a monetary policy shock, which is inconsistent with empirical findings.
In recent discussions, Bagus and Howden (2012) argue that price stickiness
is a poor justification for advocating a flexible supply of money.
Carvalho, "Heterogeneity in Price Stickiness
and the New Keynesian Phillips Curve," B.E.
We show that increasing price stickiness
in a model with deep habits hinders the crowding-in of consumption.
In the real-business-cycle tradition, cyclical fluctuations arise from productivity shocks passed on to the real economy through a well-functioning price system devoid of monetary nonneutralities and nominal price stickiness
. Of course, only the first two horses contended in the debate during the Great Inflation.
But, in the case of the euro crisis, price stickiness
caused inflation to increase more in debtor countries than in creditor countries, making adjustment even more painful.
Key risks to our view are (1) steep decline in crude prices and base oil price stickiness
in local market in line with the trend seen in 2008, (2) NRL not passing down the impact of potential cut in Federal Excise Duty (FED) on base oil.
The main focus of this paper is the study of Keynes's theory of liquidity preference and his analysis of price stickiness
. In this paper I am particularly interested in exploring the existence of behavioral insights in Keynes's work, his monetary theory of the rate of interest, and his revolutionary logical analysis of an entrepreneurial economy.