Output stabilization and real rigidity

George J. Bratsiotis, Christopher Martin

Research output: Contribution to journalArticlepeer-review


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
Issue number6
Publication statusPublished - Dec 2005


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