Fehr, Ernst; Tyran, Jean-Robert (2014). Does money illusion matter?: Reply. American Economic Review, 104(3):1063-1071.
The data in Fehr and Tyran (FT, 2001) and Luba Petersen and Abel Winn (PW,2013) show that money illusion plays an important role in nominal price adjustment after a fully anticipated negative monetary shock. Money Illusion affects subjects' expectations, and causes pronounced nominal inertia after a negative shock but much less inertia after a positive shock. Thus PW provide a misleading interpretation both of our and their own data.
The data in Fehr and Tyran (FT, 2001) and Luba Petersen and Abel Winn (PW,2013) show that money illusion plays an important role in nominal price adjustment after a fully anticipated negative monetary shock. Money Illusion affects subjects' expectations, and causes pronounced nominal inertia after a negative shock but much less inertia after a positive shock. Thus PW provide a misleading interpretation both of our and their own data.
| Item Type: | Journal Article, refereed, original work |
|---|---|
| Communities & Collections: | 03 Faculty of Economics > Department of Economics |
| Dewey Decimal Classification: | 330 Economics |
| Scopus Subject Areas: | Social Sciences & Humanities > Economics and Econometrics |
| Language: | English |
| Date: | March 2014 |
| Deposited On: | 03 Nov 2014 08:41 |
| Last Modified: | 25 Mar 2020 22:20 |
| Publisher: | American Economic Association |
| ISSN: | 0002-8282 |
| OA Status: | Closed |
| Free access at: | Publisher DOI. An embargo period may apply. |
| Publisher DOI: | https://doi.org/10.1257/aer.104.3.1063 |
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Fehr, Ernst