학술논문
Price Inertia and Nominal Aggregate Demand in Major European Countries
Document Type
redif-paper
Source
Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES), Discussion Papers (REL - Recherches Economiques de Louvain).
Subject
Language
English
Abstract
In this paper we report new evidence on the importance of price level inertia in the four major European countries : Germany, Prance, Italy and the United Kingdom. We focus on the sensitivity of the results to different proxies for aggregate demand and different measures of equilibrium (or trend output). Overall, our results confirm the findings of related studies, and show that price level inertia is present to a significant degree in Europe. In addition, monetary aggregates appear to be a poor proxy for aggregate demand because of systematic movements in velocity.