Chancellors and central bankers face a perennial headache: booms typically cause inflation, while recessions mainly reduce output without reducing prices or inflation. New ESRC-funded research by Professor V. Bhaskar of the University of Essex explains how this problem emerges through the phenomenon of asymmetric price adjustment – the fact that firms are far quicker to increase prices than to cut them.
This work has important implications for inflation targeting by the Bank of England and other central banks. The Nobel Laureate Robert Lucas has recently argued that the optimal inflation target may be negative, so that central banks may need to deflate the economy persistently. But Bhaskars research on pricing asymmetries shows that deflation would aggravate the negative effects on output and employment considerably.
Positive inflation has the effect of raising output, since it prevents the output and employment losses due to price asymmetries. On the other hand, the inflation target for the central bank should not be too high, since the output gains are relatively modest.
Iain Stewart | EurekAlert!
Microtechnology industry is hiring – positive developments of past years continue
09.04.2018 | IVAM Fachverband für Mikrotechnik
RWI/ISL-Container Throughput Index with minor decline on a high overall level
20.03.2018 | RWI – Leibniz-Institut für Wirtschaftsforschung
Magnetic resonance imaging, or MRI, is a widely used medical tool for taking pictures of the insides of our body. One way to make MRI scans easier to read is...
At the Hannover Messe 2018, the Bundesanstalt für Materialforschung und-prüfung (BAM) will show how, in the future, astronauts could produce their own tools or spare parts in zero gravity using 3D printing. This will reduce, weight and transport costs for space missions. Visitors can experience the innovative additive manufacturing process live at the fair.
Powder-based additive manufacturing in zero gravity is the name of the project in which a component is produced by applying metallic powder layers and then...
Physicists at the Laboratory for Attosecond Physics, which is jointly run by Ludwig-Maximilians-Universität and the Max Planck Institute of Quantum Optics, have developed a high-power laser system that generates ultrashort pulses of light covering a large share of the mid-infrared spectrum. The researchers envisage a wide range of applications for the technology – in the early diagnosis of cancer, for instance.
Molecules are the building blocks of life. Like all other organisms, we are made of them. They control our biorhythm, and they can also reflect our state of...
University of Connecticut researchers have created a biodegradable composite made of silk fibers that can be used to repair broken load-bearing bones without the complications sometimes presented by other materials.
Repairing major load-bearing bones such as those in the leg can be a long and uncomfortable process.
Study published in the journal ACS Applied Materials & Interfaces is the outcome of an international effort that included teams from Dresden and Berlin in Germany, and the US.
Scientists at the Helmholtz-Zentrum Dresden-Rossendorf (HZDR) together with colleagues from the Helmholtz-Zentrum Berlin (HZB) and the University of Virginia...
13.04.2018 | Event News
12.04.2018 | Event News
09.04.2018 | Event News
26.04.2018 | Physics and Astronomy
26.04.2018 | Life Sciences
26.04.2018 | Medical Engineering