Fiche du document
- handle: 10670/1.44znrm
- halshs: halshs-00492204
info:eu-repo/semantics/OpenAccess
Mots-clés
new-Keynesian macroeconomics Business cycle costs inefficiency gap new-Keynesian macroeconomics. E - Macroeconomics and Monetary Economics/E.E3 - Prices, Business Fluctuations, and Cycles/E.E3.E32 - Business Fluctuations • Cycles E - Macroeconomics and Monetary Economics/E.E1 - General Aggregative Models/E.E1.E12 - Keynes • Keynesian • Post-KeynesianSujets proches
TradeCiter ce document
Jean-Olivier Hairault et al., « Markups and the Welfare Cost of Business Cycles : A Reappraisal », HAL-SHS : économie et finance, ID : 10670/1.44znrm
Métriques
Partage / Export
Résumé
Gali et al. (2007) have recently shown in a quantitative way that inefficient fluctuations in the allocation of resources do not generate sizable welfare costs. In this note, we show that their evaluation underestimates the welfare costs of inefficient fluctuations and propose a biased estimate of the impact of structural distortions on business cycle costs. As monopolistic suppliers, both firms and households aim at preserving their expected markups ; the interaction between aggregate fluctuations in the efficiency gap and price-setting behaviors results in making average consumption and employment lower than their counterparts in the flexible price economy. This level increases the welfare cost of business cycles. It is all the more sizable in that the degree of inefficiency is structurally high at the steady state.