Does price rigidity cause large social or private costs?: An article from: Atlantic Economic Journal
Book Details
Author(s)Hwan-Chyang Lin
PublisherAtlantic Economic Society
ISBN / ASINB00092UTKU
ISBN-13978B00092UTK3
MarketplaceFrance 🇫🇷
Description
This digital document is an article from Atlantic Economic Journal, published by Atlantic Economic Society on December 1, 1993. The length of the article is 4352 words. The page length shown above is based on a typical 300-word page. The article is delivered in HTML format and is available in your Amazon.com Digital Locker immediately after purchase. You can view it with any web browser.
From the author: Nominal rigidity is a necessary condition for nominal disturbances to cause aggregate output fluctuations. The paper studies whether price rigidity can entail a large social welfare loss far beyond the resulting private loss in a general setting with many (endogenous) monopoly firms and a representative consumer-worker. Numerical simulation finds that the social welfare cost of rigidity is increasing in the concavity of the economy's welfare function. This positive relationship, however, cannot guarantee the social cost to dominate the private cost. Rather, the former turns out smaller than the latter for a wide range of parameter values, in contrast to most recent work. The implication is that gains from stabilization policy may be negligible. (JEL E12, E3, D4)
Citation Details
Title: Does price rigidity cause large social or private costs?
Author: Hwan-Chyang Lin
Publication:Atlantic Economic Journal (Refereed)
Date: December 1, 1993
Publisher: Atlantic Economic Society
Volume: v21 Issue: n4 Page: p11(11)
Distributed by Thomson Gale
From the author: Nominal rigidity is a necessary condition for nominal disturbances to cause aggregate output fluctuations. The paper studies whether price rigidity can entail a large social welfare loss far beyond the resulting private loss in a general setting with many (endogenous) monopoly firms and a representative consumer-worker. Numerical simulation finds that the social welfare cost of rigidity is increasing in the concavity of the economy's welfare function. This positive relationship, however, cannot guarantee the social cost to dominate the private cost. Rather, the former turns out smaller than the latter for a wide range of parameter values, in contrast to most recent work. The implication is that gains from stabilization policy may be negligible. (JEL E12, E3, D4)
Citation Details
Title: Does price rigidity cause large social or private costs?
Author: Hwan-Chyang Lin
Publication:Atlantic Economic Journal (Refereed)
Date: December 1, 1993
Publisher: Atlantic Economic Society
Volume: v21 Issue: n4 Page: p11(11)
Distributed by Thomson Gale
