Imperfect competition, the multiplier, and the non-neutrality of money

an example in the spirit of Hart
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Birkbeck College , London
StatementHuw Dixon.
SeriesDiscussion paper in economics -- 87/13
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Open LibraryOL14855328M

Oxford Economic Papers 42 (), IMPERFECT COMPETITION, UNEMPLOYMENT BENEFIT AND THE NON-NEUTRALITY OF MONEY: AN EXAMPLE By HUW DIXON Introduction WHAT influence does trade union power have on the nature of macro- economic equilibrium, and the ability of the government to influence that equilibrium.

imperfect competition, but on non-neutrality of money. The first implication is d erived from the earl y Otaki model, while t he second one is derived fr om the late Otaki model.

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However, in the subsequent mushrooming literature, economists virtually ignored this possible non-neutrality of money under imperfect competition. Thus, as late asDixon and Rankin, in their survey of imperfect competition and macroeconomics, conclude that ‘Imperfect competition by itself does not create monetary non-neutrality Cited by: 7.

“Otaki model” is an overlapping generations (OLG) model with fiat money and imperfect competition. It derives Keynesian implications such as involuntary unemployment, welfare-improving fiscal and monetary policy, and money non-neutrality. Though its structure can be appliedAuthor: Masaoki Tamura.

Imperfect competition alone is enough for fiscal policy to affect output but, without monetary nonneutrality, the effect is as likely to be negative as positive.

However, most of the literature in macroeconomics unfortunately misses this possibility of non-neutrality of money under imperfect competition and believes that Imperfect competition by itself does not create monetary non-neutrality It is the combination of imperfect competition with some other distortion which generates the potential for.

In general, models of imperfect competition have tended to be rather complex, despite a recent trend towards simpler versions (e.g. Hart (), d'Aspremont et al.

()). Torregrosa, Ramon J., "On the monotonicity of balanced budget multiplier under imperfect competition," Economics Letters, Elsevier, vol. 59(3), pagesJune. Emmanuelle Taugourdeau, "Imperfect Competition and Fiscal Policy Transmission in a Two-Country Economy," Open Economies Review, Springer, vol.

13(1), pagesJanuary. Abstract. The purpose of this paper is to derive some new results and to link together these results with an existing literature. The focus of the paper is a macroeconomy characterized by monopolistic competition in output markets, but with a perfectly competitive labour market.

The short run non-neutrality of money can be understood in the context of departures from the pure competition (Walras-Arrow-Debreu) paradigm, due to imperfect information, imperfect competition or both. Lucas (, ) is the classic reference on the role of imperfect information.

Under complete information, a shock to the supply of money would translate into an immediate equiproportional. JEL classification: E52 Keywords: Imperfect competition; Money non-neutrality; Expectations I.

Introduction Hart's () is perhaps the most intriguing and least understood of the papers which in the last decade and a half have derived results on macroeconomic policy effectiveness from imperfectly competitive microfoundations. 1 It is very tempting to see Hart's model as. Abstract. The term ‘new Keynesian economics’ refers to a body of work done by macroeconomists in the late s and s in which the notion of imperfect competition was introduced into macroeconomics in order to provide a micro-foundation for nominal rigidities and also to provide an alternative to supply-equals-demand equilibrium.

"Imperfect Competition and the Fiscal Multiplier," Scandinavian Journal of Economics, Wiley Blackwell, vol. 98(2), pagesJune.

Description Imperfect competition, the multiplier, and the non-neutrality of money FB2

Dixit, Avinash K & Stiglitz, Joseph E, "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pagesJune. This is the world of imperfect competition, one that lies between the idealized extremes of perfect competition and monopoly.

It is a world in which firms battle over market shares, in which economic profits may persist, in which rivals try to outguess each other with pricing, advertising, and product-development strategies. MONETARY PERSISTENCE, IMPERFECT COMPETITION, AND STAGGERING COMPLEMENTARITIES - Volume 13 Issue 1 - Christian Merkl, Dennis Snower.

monopol istic competition, implying money non-neutrality. The full indexation. the real variables, as it can be verified comparing the money multiplier (20) with that obtained in the. Hart's macroeconomic model with imperfect competition is recast in a temporary monetary equilibrium setting, first with a single representative consumer, then with overlapping generations of consumers.

Production technology is generalised to permit unemployment for a wider range of parameter values. Imperfect Competition and New Keynesian Economics 50 books.

† References in the notes refer to articles given on the reading list. With † Money and Prices: In Ecalthough you may have occasionally referred to variables denominated in dollars, the fact that transactions required a.

Economic Jour Dixon, H.,A simple model of imperfect competition with Walrasian features, Oxford Economic Pap Dixon, H.,Imperfect competition, the multiplier and the non-neutrality of money:. Downloadable. This paper surveys the link between imperfect competition and the effects of fiscal policy on output, employment and welfare.

We examine static and dynamic models, with and without entry under a variety of assumptions using a common analytical framework. We find that in general there is a robust relationship between the fiscal multiplier and welfare, the tantalizing possibility.

Read this book on Questia. Read the full-text online edition of Imperfect Competition, Differential Information, and Microfoundations of Macroeconomics (). Externality in Information Acquisition and the Non-Neutrality of Money Huw Dixon (), 'Imperfect Competition, Unemployment Benefit and the Non-Neutrality of Money: An Example' Jean-Pascal Benassy (), 'Microeconomic Foundations and Properties of a Macroeconomic Model with Imperfect Competition' PART II IMPERFECT COMPETITION AND PRICE RIGIDITIES A MARKET STRUCTURE In a Keynesian framework, additional public funds will have an impact on the multiplier effects of public spending.

Censolo and Colombo () consider heterogeneous firms in the imperfect. Imperfect competition by itself does not create monetary non-neutrality.

It is the combination of imperfect competition with some other distortions, such as multiplicity of equilibria, 'menu cost', non-unit-elastic price expecta- tion and small nominal rigidity, that.

Olivier Jean Blanchard and Nobuhiro Kiyotaki (), 'Monopolistic Competition and the Effects of Aggregate Demand'8. Huw Dixon (), 'A Simple Model of Imperfect Competition with Walrasian Features'9.

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Huw Dixon (), 'Imperfect Competition, Unemployment Benefit and the Non-Neutrality of Money: An Example'Seller Rating: % positive. Olivier Jean Blanchard and Nobuhiro Kiyotaki (), 'Monopolistic Competition and the Effects of Aggregate Demand'8.

Huw Dixon (), 'A Simple Model of Imperfect Competition with Walrasian Features'9. Huw Dixon (), 'Imperfect Competition, Unemployment Benefit and the Non-Neutrality of Money: An Example' A model of imperfect competition with Keynesian features, ().

A note on taxation, imperfect competition, and the balanced-budget multiplier, (). A positive theory of social security, (). A simple model of imperfect competition with Walrasian features, Unemployment benefit and the non-neutrality of money: an example.

Externality in Information Acquisition and the Non-Neutrality of Money. Indexation and Imperfect Insulation from Nominal Disturbances --pt.

Pricing, Investment, and Competition. Cost-Based Prices: Competition and Price Behaviour under Correlated Shocks in Demand and Supply. Competition and the Volatility of Investment. Economics Letters 26 () 7 North-Holland IMPERFECT COMPETITION AND THE KEYNESIAN CROSS N.

Gregory MANKIW Harvard University, Cambridge, MAUSA National Bureau of Economic Research, Cambridge, MAUSA Received 3 November This paper presents a simple general equilibrium model in which the only non-Walrasian feature is imperfect competition.

International Trade under imperfect competition Balance of Payments: Composition, Equilibrium and Disequilibrium and Adjustment Mechanisms Exchange Rate: Concepts and Theories Foreign Exchange Market and Arbitrage Gains from Trade, Terms of Trade, Trade Multiplier Tariff and Non-Tariff barriers to trade; Dumping.

is your source for learning, practicing, and reviewing economics. The site includes games and activities as well as content review covering all of Microeconomics and Macroeconomics. With ace your next Advanced Placement (AP), International Baccalaureate (IB).

Below you will find 25 questions covering bank balance sheets, the money multiplier, and the money supply. If you would like to review this content before you test yourself, head over to the Monetary Policy Tools content review first.

Suggested Minimum Score: The greater the degree of imperfect competition in the output market, the lower the real wage and hence the more the reduction falls on leisure (i.e. households work more) and less on consumption.

Hence the fiscal multiplier is less than one, but increasing in the degree of imperfect competition .