A Note on NNS Models: Introducing Physical Capital; Avoiding Rationing

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Serval ID
serval:BIB_440BC940D9D1
Type
Article: article from journal or magazin.
Collection
Publications
Institution
Title
A Note on NNS Models: Introducing Physical Capital; Avoiding Rationing
Journal
Economic Letters
Author(s)
Danthine J.-P., Donaldson J.B.
Publication state
Published
Issued date
2002
Peer-reviewed
Oui
Volume
77
Pages
433-437
Language
english
Abstract
This note makes two comments on recent NNS models. First, it disputes the way physical capital has been introduced into these models arguing that this leads to the dubious postulate that the cost of adjusting physical capital stock is an order of magnitude lower than the cost of changing prices. Second it warns against a possible logical inconsistency whereby calibrated NNS models are implicitly assuming that some (price-constrained) firms are willing and able to sell their output below cost.
Keywords
New neo-classical synthesis, sticky prices, cost-of-adjusting capital
Create date
19/11/2007 10:24
Last modification date
20/08/2019 13:48
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