https://massivebrown.amebaownd.com/posts/22957629. Sun, Rongrong (2012): Nominal Rigidity and Some New Evidence on the New Keynesian Theory of the Output-Inflation Tradeoff.

Non Neutrality Of Money Real Rigidity Nominal Rigidity And Flexibility
Non Neutrality Of Money Real Rigidity Nominal Rigidity Definition

The need for the study is also clear from the statement of Ball and Romer (1990) that, though there are real rigidities, but in the absence of independent source of nominal stickiness, prices adjust fully to nominal shock, thereby counteracting the monetary nonneutrality of monetary shock theory.Specifically therefore, this study intends to find out the size of the friction in nominal adjustment and then, the impact of monetary policy on both the nominal and real variables in Nigeria.The.
Nominal rigidity in some sectors explains the persistence of both output and in⁄ation (Dixon and Kara 2010, 2011). If nomninal prices are sluggish, means that money has real a⁄ect on output, also spreads out the response of in⁄ation. Prices do not react immediately, but the e⁄ect happens over a longer period.

This paper shows that monetary policy produces real effects in the steady state by impacting banks' liquidity constraint, in the absence of frictions that have been used to generate non-neutrality, such as nominal rigidity and search frictions. Moreover, the effects for different types of banks are different, even opposite. In the model, each bank sees a fraction of money that it lends out.

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Abstract

This paper develops a series of tests to check whether the New Keynesian nominal rigidity hypothesis on the output-inflation tradeoff withstands new evidence. In so doing, I summarize and evaluate different estimation methods that have been applied in the literature to address this hypothesis. Both cross-country and over-time variations in the output-inflation tradeoff are checked with the tests that differentiate the effects on the tradeoff that are attributable to nominal rigidity (the New Keynesian argument) from those ascribable to variance in nominal growth (the alternative new classical explanation). I find that in line with the New Keynesian hypothesis, nominal rigidity is an important determinant of the tradeoff. Given less rigid prices in high-inflation environments, changes in nominal demand are transmitted to quicker and larger movements in prices and lead to smaller fluctuations in the real economy. The tradeoff between output and inflation is hence smaller.

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Non Neutrality Of Money Real Rigidity Nominal Rigidity And Flexibility

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Non Neutrality Of Money Real Rigidity Nominal Rigidity Definition

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Non Neutraliy Of Money Real Rigidity Nominal Rigidity