What Is New Keynesian Economics?
Rigid prices explain why money policy matters in the short run.
Video coming soon. The lesson video will appear here once it is published on YouTube.
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1.How does Gregory Mankiw describe New Keynesian economics?
Rigid prices explain why money policy matters in the short run.
2.What does sticky prices mean in the video?
In the textbook version a firm gets a chance to reprice only now and then, a modeling shortcut.
3.Why might a firm delay changing prices?
In 1985, Mankiw and Akerlof and Yellen showed such delays can be costly for society.
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Sources (5)
- Mankiw, N. G.: The Macroeconomist as Scientist and Engineer, NBER Working Paper 12349 (2006); Journal of Economic Perspectives 20 (4), 2006, S. 29-46
- Clarida, R., Galí, J., Gertler, M.: The Science of Monetary Policy: A New Keynesian Perspective, NBER Working Paper 7147 (1999); Journal of Economic Literature 37 (4), 1999, S. 1661-1707
- Bils, M., Klenow, P. J.: Some Evidence on the Importance of Sticky Prices, NBER Working Paper 9069 (2002); Journal of Political Economy 112 (5), 2004
- Chari, V. V., Kehoe, P. J., McGrattan, E. R.: New Keynesian Models: Not Yet Useful for Policy Analysis, NBER Working Paper 14313 (2008); American Economic Journal: Macroeconomics 1 (1), 2009
- Friedman, M.: The Role of Monetary Policy, American Economic Review 58 (1), 1968, S. 1-17
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