Relative-price changes as aggregate supply shocks
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Relative-price changes as aggregate supply shocks

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Published by Federal Reserve Bank of Philadelphia, Economic Research Division in Philadelphia .
Written in English


Book details:

Edition Notes

StatementLaurence Ball, N. Gregory Mankiw.
SeriesEconomic research working paper series / Federal Reserve Bank of Philadelphia, Economic Research Division -- no.13, Economic research workingpaper (Federal Reserve Bank of Philadelphia, Economic Research Division) -- no.13.
ContributionsMankiw, N. Gregory.
ID Numbers
Open LibraryOL13975282M

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"Relative-Price Changes as Aggregate Supply Shocks," The Quarterly Journal of Economics, Oxford University Press, vol. (1), pages Laurence Ball & N. Gregory Mankiw, " Relative-price changes as aggregate supply shocks," Working Papers 93 Cited by: Get this from a library! Relative-price changes as aggregate supply shocks. [Laurence M Ball; N Gregory Mankiw; National Bureau of Economic Research.]. RELATIVE-PRICE CHANGES AS AGGREGATE SUPPLY SHOCKS* LAURENCE BALLAND N. GREGORY MANKIW This paper proposes a theory of supply shocks, or shifts in the short-run Phillips curve, based on relative-price changes and frictions in nominal price adjustment. When price adjustment is costly, firms adjust to large shocks but not to. Relative-price changes as aggregate supply shocks. Cambridge, MA: National Bureau of Economic Research, [] (OCoLC) Material Type: Document, Internet resource: Document Type: Internet Resource, Computer File: All Authors / Contributors: Laurence M Ball; National Bureau of Economic Research.

relative price changes are considered as aggregate supply shocks. They argue that the existence of such relati onships is ‘a novel empirical prediction’ of a menu costs model 6. RELATIVE-PRICE CHANGES AS AGGREGATE SUPPLY SHOCKS ABSTRACT This paper proposes a theory of supply shocks, or shifts in the short-run Phillips curve, based on relative-price changes and frictions in nominal price adjustment. When price adjustment is costly, firms adjust to large shocks but not to small shocks, and so large shocks have. relative price changes as supply shocks. Ball and Mankiw () exploit the positive relationship between inflation and relative price dispersion/skewness to propose a theory of aggregate inflation, in which relative price changes are considered as aggregate supply shocks. They argue that theCited by: 1. Thus, the relative price changes had the essential traits of an aggregate supply shock. Economists, however, came up with various different stories to interpret relative price changes as supply shocks. Ball and Mankiw () exploit the positive relationship between inflation and.

Relative-price shocks can have an important impact on the public’s inflation expectations even though they are distinct from inflation. Consumers confront individual prices, not price indexes, on a day-to-day basis, and they might interpret big changes in specific prices, like gasoline or food items, as signals of emerging by: 2. Balke and Wynne () argue that sectoral technology shocks can lead to relative price changes and aggregate inflation. Fischer () gives a good summary of all three possibilities discussed in. Problem: Explain the chain of events that causes the aggregate demand curve to be upward sloping according to the imperfect- information model. The chain of events that leads from an increase in the price level to an increase in output in the imperfect-information model: when the overall price level rises, producers mistake it for a relative increase in the price level. UNCERTAINTY SHOCKS ARE AGGREGATE DEMAND SHOCKS 3 that uncertainty shocks continue to be an important factor explaining the sharp increase in unemployment in the Great Recession and recovery. Interestingly, uncertainty shocks did not always play an important role during previous recessions and recoveries.