Skip Nav Destination
Close Modal
Update search
NARROW
Format
Journal
Date
Availability
1-2 of 2
Florin O. Bilbiie
Close
Follow your search
Access your saved searches in your account
Would you like to receive an alert when new items match your search?
Sort by
Journal Articles
Publisher: Journals Gateway
The Review of Economics and Statistics (2021) 103 (3): 492–504.
Published: 08 July 2021
Abstract
View article
PDF
Monetary policy is neutral even with fixed prices if free entry determines product variety optimally, as in Dixit and Stiglitz ( 1977 ). Entry substitutes for price flexibility in the welfare-based price index when individual prices are sticky. In response to aggregate demand expansions, the intensive (quantity produced of each good) and ex tensive (number of goods being produced) margins move in offsetting ways, leaving aggregate production unchanged. Price stickiness thus generates deviations from monetary neutrality only in conjunction with entry frictions: when variety is not optimally determined (preferences are not Dixit-Stiglitz) or when entry is subject to sunk costs and lags. Wage stickiness instead implies nonneutrality even in the frictionless-entry benchmark.
Journal Articles
Publisher: Journals Gateway
The Review of Economics and Statistics (2013) 95 (2): 377–392.
Published: 01 May 2013
Abstract
View article
PDF
This paper argues that limited asset market participation is crucial in explaining U.S. macroeconomic performance and monetary policy before the 1980s and their changes thereafter. In an otherwise conventional sticky-price model, standard aggregate demand logic is inverted at low enough asset market participation: interest rate increases become expansionary, and passive monetary policy ensures equilibrium determinacy and maximizes welfare. This suggests that Federal Reserve policy in the pre-Volcker era was better than conventional wisdom implies. We provide empirical evidence consistent with this hypothesis and study the relative merits of changes in structure and shocks for reproducing the conquest of the Great Inflation and the Great Moderation.
Includes: Supplementary data