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  3. American Economic Journal: Macroeconomics
  4. April 2013
  5. Is There a Trade-Off between Inflation and Output Stabilization?

Is There a Trade-Off between Inflation and Output Stabilization?

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Abstract

We find that the answer is no in an estimated DSGE model of the US economy in which exogenous movements in workers' market power are not a major driver of observed economic fluctuations. If they are, the tension between the conflicting stabilization objectives of monetary policy increases, but with negligible effects on the equilibrium behavior of the economy under optimal policy. (JEL E12, E23, E24, E31, E32, E52)

Citation

Justiniano, Alejandro, Giorgio E. Primiceri, and Andrea Tambalotti. 2013. "Is There a Trade-Off between Inflation and Output Stabilization?" American Economic Journal: Macroeconomics, 5 (2): 1-31. DOI: 10.1257/mac.5.2.1

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JEL Classification

  • E12 General Aggregative Models: Keynes; Keynesian; Post-Keynesian
  • E23 Macroeconomics: Production
  • E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital
  • E31 Price Level; Inflation; Deflation
  • E32 Business Fluctuations; Cycles
  • E52 Monetary Policy
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