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
A new manufacturing technique uses a process similar to newspaper printing to form smoother and more flexible metals for making ultrafast electronic devices.
The low-cost process, developed by Purdue University researchers, combines tools already used in industry for manufacturing metals on a large scale, but uses...
For the first time ever, scientists have determined the cosmic origin of highest-energy neutrinos. A research group led by IceCube scientist Elisa Resconi, spokesperson of the Collaborative Research Center SFB1258 at the Technical University of Munich (TUM), provides an important piece of evidence that the particles detected by the IceCube neutrino telescope at the South Pole originate from a galaxy four billion light-years away from Earth.
To rule out other origins with certainty, the team led by neutrino physicist Elisa Resconi from the Technical University of Munich and multi-wavelength...
For the first time a team of researchers have discovered two different phases of magnetic skyrmions in a single material. Physicists of the Technical Universities of Munich and Dresden and the University of Cologne can now better study and understand the properties of these magnetic structures, which are important for both basic research and applications.
Whirlpools are an everyday experience in a bath tub: When the water is drained a circular vortex is formed. Typically, such whirls are rather stable. Similar...
Physicists working with Roland Wester at the University of Innsbruck have investigated if and how chemical reactions can be influenced by targeted vibrational excitation of the reactants. They were able to demonstrate that excitation with a laser beam does not affect the efficiency of a chemical exchange reaction and that the excited molecular group acts only as a spectator in the reaction.
A frequently used reaction in organic chemistry is nucleophilic substitution. It plays, for example, an important role in in the synthesis of new chemical...
Optical spectroscopy allows investigating the energy structure and dynamic properties of complex quantum systems. Researchers from the University of Würzburg present two new approaches of coherent two-dimensional spectroscopy.
"Put an excitation into the system and observe how it evolves." According to physicist Professor Tobias Brixner, this is the credo of optical spectroscopy....
13.07.2018 | Event News
12.07.2018 | Event News
03.07.2018 | Event News
20.07.2018 | Power and Electrical Engineering
20.07.2018 | Information Technology
20.07.2018 | Materials Sciences