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| Franck Portier |
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| ''Menu costs, (s,S) rule, imperfect information and the neutrality of money'' |
| ( 2004, Vol. 5 No.7 ) |
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| A dynamic macroeconomic model of monopolistic competition and imperfect information with menu costs and (s,S) pricing rule is proposed, in the lines of Caballero and Engel [1991]. The model can be seen as an imperfect competition version of Lucas [1973] with menu costs. The presence of informational imperfection destroys the neutrality result of Caplin and Spulber [1987], and the effect of a monetary shock on output is shown to be an increasing function of the degree of strategic complementarity between firms. |
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| Keywords: |
JEL: E3 - Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data)
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| Manuscript Received : Apr 06 2004 | | Manuscript Accepted : Apr 12 2004 |
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