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dc.contributor.authorWEBER, Henning
dc.date.accessioned2012-04-19T11:39:32Z
dc.date.available2012-04-19T11:39:32Z
dc.date.issued2012
dc.identifier.citationJournal of Money, Credit and Banking, 2012, 44, 2-3, 255–299en
dc.identifier.issn1538-4616
dc.identifier.issn0022-2879
dc.identifier.urihttp://hdl.handle.net/1814/21662
dc.descriptionArticle first published online: 27 MAR 2012en
dc.descriptionThe article is a revised version of EUI Working Paper, RSCAS 2009/44
dc.description.abstractThe paper examines a New Keynesian model with product entry and exit and with two types of households. Households consume different product baskets, and therefore, face different inflation rates. The statistical bureau used in the model measures aggregate inflation, but observes product entry with a probabilistic delay. Consequently, measured inflation suffers from product replacement bias with respect to aggregate inflation. Measured inflation is less volatile but more persistent than aggregate inflation, and the correlation between aggregate inflation and aggregate output is lower than the correlation between measured inflation and measured output. When monetary policy responds to measured variables, it stabilizes aggregate inflation insufficiently. Nevertheless, under discretionary monetary policy, responding to measured variables improves welfare.en
dc.format.mimetypeapplication/pdf
dc.language.isoenen
dc.relation.isbasedonhttp://hdl.handle.net/1814/12387
dc.rightsinfo:eu-repo/semantics/openAccess
dc.titleProduct Replacement Bias in Inflation and its Consequences for Monetary Policyen
dc.typeArticleen
dc.identifier.doi10.1111/j.1538-4616.2011.00487.x
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