Year: 2014
Type: article
Abstract: The data in Fehr and Tyran (2001) and Petersen and Winn (2014) 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 Petersen and Winn (2014) provide a misleading interpretation of both our and their own data. (JEL C92, D83, D84, E31, E32, E52)
Source: American Economic Review
Authors: Ernst Fehr, Jean-Robert Tyran
Language: English
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2018238112