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Monetary persistence, imperfect competition, and staggering complementarities

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  • Merkl, Christian
  • Snower, Dennis J.

Abstract

This paper explores the influence of wage and price staggering on monetary persistence. First, our analysis indicates that the degree of monetary persistence generated by wage vis-à-vis price staggering depends on the relative competitiveness of the labor and product markets. We show that the conventional wisdom that wage staggering can generate more persistence than price staggering does not necessarily hold. Second, this paper discusses weaknesses of the contract multiplier, which is generally used to compare persistence, and proposes the measure quantitative persistence. Third, we show that, for plausible parameter values, wage and price staggering are highly complementary in generating monetary persistence. Thus beyond understanding how they work in isolation, it is important to explore their interactions.

Suggested Citation

  • Merkl, Christian & Snower, Dennis J., 2005. "Monetary persistence, imperfect competition, and staggering complementarities," Kiel Working Papers 1257, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:1257
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    References listed on IDEAS

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    6. Huang, Kevin X. D. & Liu, Zheng, 2002. "Staggered price-setting, staggered wage-setting, and business cycle persistence," Journal of Monetary Economics, Elsevier, vol. 49(2), pages 405-433, March.
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    Cited by:

    1. Marika Karanassou & Hector Sala & Dennis J. Snower, 2008. "The Evolution Of Inflation And Unemployment: Explaining The Roaring Nineties," Australian Economic Papers, Wiley Blackwell, vol. 47(4), pages 334-354, December.
    2. Marika Karanassou & Hector Sala & Dennis J. Snower, 2010. "Phillips Curves And Unemployment Dynamics: A Critique And A Holistic Perspective," Journal of Economic Surveys, Wiley Blackwell, vol. 24(1), pages 1-51, February.

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    More about this item

    Keywords

    Price Staggering; Wage Staggering; Monetary Policy; Monetary Persistence;
    All these keywords.

    JEL classification:

    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General

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