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- Title
Nominal Frictions, Relative Price Adjustment, and the Limits to Monetary Policy.
- Authors
Wolman, Alexander L.
- Abstract
The article focuses on nominal frictions and relative price adjustments, and the limits to monetary policy in the U.S. It states that if prices or wages are sticky in only one sector of an economy, and if there is no heterogeneity across regions, the monetary policy can loosen the effects of price stickiness. However, if there is more than one sector with sticky prices, the nominal rigidities cause distortions under any monetary policy. The author also described several examples of distortions, such as frictions in labor market or monopoly power in goods markets.
- Subjects
UNITED States; MACROECONOMICS; PRICES; WAGES; MONETARY policy; PRICE stickiness; ECONOMIC policy; MONEY supply; LABOR market; MONOPOLIES
- Publication
Economic Quarterly (10697225), 2008, Vol 94, Issue 3, p219
- ISSN
1069-7225
- Publication type
Article