NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
loading...

Sticky Prices Versus Sticky Information: Does it Matter for Policy Paradoxes?

Gauti B. Eggertsson, Vaishali Garga

NBER Working Paper No. 23961
Issued in October 2017
NBER Program(s):The Monetary Economics Program

This paper shows that government spending multiplier at the zero lower bound (ZLB) is larger under sticky information than under sticky prices. Similarly, well known paradoxes, e.g., the paradox of toil and the paradox of flexibility become more severe under sticky information. For the case of sticky information it is important to assume that the fiscal policy intervention coincides with the duration of zero interest rates, while such distinction is less important in some special cases for sticky prices. This allows us to unify and clarify results that may appear to contradict each other in the literature.

download in pdf format
   (310 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w23961

Published: Gauti B. Eggertsson & Vaishali Garga, 2018. "Sticky prices versus sticky information: Does it matter for policy paradoxes?," Review of Economic Dynamics, .

Users who downloaded this paper also downloaded* these:
Eggertsson, Juelsrud, and Wold w24039 Are Negative Nominal Interest Rates Expansionary?
Eggertsson, Mehrotra, and Robbins w23093 A Model of Secular Stagnation: Theory and Quantitative Evaluation
Nakamura and Steinsson w23968 Identification in Macroeconomics
Romer and Romer w23931 Why Some Times Are Different: Macroeconomic Policy and the Aftermath of Financial Crises
Uribe w23977 The Neo-Fisher Effect in the United States and Japan
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us