Output stabilization and real rigidity

George J. Bratsiotis, Christopher Martin

Research output: Contribution to journalArticlepeer-review

Abstract

We use a simple model to show that there is a positive relationship between monetary policy preferences for output stability, real rigidity and macroeconomic persistence. This result has two non-trivial implications. First it suggests that output stabilization may be a less desirable policy target since it generates real rigidity and macroeconomic persistence. Second, it provides a theoretical rationale as to why models in which monetary policy does not respond to output have been typically unable to replicate the persistence observed in real data. © Blackwell Publishing Ltd and The University of Manchester, 2005.
Original languageEnglish
Pages (from-to)728-736
Number of pages8
JournalManchester School
Volume73
Issue number6
DOIs
Publication statusPublished - Dec 2005

Fingerprint

Dive into the research topics of 'Output stabilization and real rigidity'. Together they form a unique fingerprint.

Cite this