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
The building blocks of matter in our universe were formed in the first 10 microseconds of its existence, according to the currently accepted scientific picture. After the Big Bang about 13.7 billion years ago, matter consisted mainly of quarks and gluons, two types of elementary particles whose interactions are governed by quantum chromodynamics (QCD), the theory of strong interaction. In the early universe, these particles moved (nearly) freely in a quark-gluon plasma.
This is a joint press release of University Muenster and Heidelberg as well as the GSI Helmholtzzentrum für Schwerionenforschung in Darmstadt.
Then, in a phase transition, they combined and formed hadrons, among them the building blocks of atomic nuclei, protons and neutrons. In the current issue of...
Thin-film solar cells made of crystalline silicon are inexpensive and achieve efficiencies of a good 14 percent. However, they could do even better if their shiny surfaces reflected less light. A team led by Prof. Christiane Becker from the Helmholtz-Zentrum Berlin (HZB) has now patented a sophisticated new solution to this problem.
"It is not enough simply to bring more light into the cell," says Christiane Becker. Such surface structures can even ultimately reduce the efficiency by...
A study in the journal Bulletin of Marine Science describes a new, blood-red species of octocoral found in Panama. The species in the genus Thesea was discovered in the threatened low-light reef environment on Hannibal Bank, 60 kilometers off mainland Pacific Panama, by researchers at the Smithsonian Tropical Research Institute in Panama (STRI) and the Centro de Investigación en Ciencias del Mar y Limnología (CIMAR) at the University of Costa Rica.
Scientists established the new species, Thesea dalioi, by comparing its physical traits, such as branch thickness and the bright red colony color, with the...
Scientists have succeeded in observing the first long-distance transfer of information in a magnetic group of materials known as antiferromagnets.
An international team of researchers has mapped Nemo's genome, providing the research community with an invaluable resource to decode the response of fish to...
03.09.2018 | Event News
27.08.2018 | Event News
17.08.2018 | Event News
20.09.2018 | Earth Sciences
20.09.2018 | Earth Sciences
20.09.2018 | Physics and Astronomy