tag:blogger.com,1999:blog-4159906646513306121.post4032782025729936845..comments2023-11-19T20:38:50.237-08:00Comments on Economic Logic: Even producer prices are flexibleEconomic Logicianhttp://www.blogger.com/profile/10171296292101248614noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-4159906646513306121.post-89699449193066251382010-02-04T08:30:25.956-08:002010-02-04T08:30:25.956-08:00Why all this discussion. I learned as a student fo...Why all this discussion. I learned as a student forty years ago that prices for raw materials are more flexible than the prices of end products and price flexibility diminished as you get closer to the end of the production chain. Further, money wages are significantly more flexible than the price level is. (You get increasing real wages in the boom.) All this is a set of well-known stylized facts.<br /><br />Yet all this does not imply that markets are allways cleared! This seems patently not to be the case, unless you define market clearing in a tautological way. Some people who argue for price flexibility seem to draw this premature conclusion.Ekkehart Schlichthttps://www.blogger.com/profile/03956592476069086149noreply@blogger.comtag:blogger.com,1999:blog-4159906646513306121.post-14760001217434646452010-02-01T08:11:11.839-08:002010-02-01T08:11:11.839-08:00We do not even know whether monetary policy has a ...We do not even know whether monetary policy has a real impact. Models only tell us it has when prices are rigid, and that is the justification of those who "believe" in monetary policy. At this point, it really looks like you need to have "faith" to support active monetary policyKansannoreply@blogger.comtag:blogger.com,1999:blog-4159906646513306121.post-81258075211458385432010-02-01T08:05:40.768-08:002010-02-01T08:05:40.768-08:00That's not the issue, is it? People "need...That's not the issue, is it? People "need" rigidity to break neutrality. They think monetary policy is very important for short-run outcomes. -- So what should we make of that?Agent Continuumhttp://agentcontinuum.wordpress.com/noreply@blogger.comtag:blogger.com,1999:blog-4159906646513306121.post-4643545694650727802010-02-01T08:00:41.322-08:002010-02-01T08:00:41.322-08:00Huh? So, if in the US prices are not rigid then p...Huh? So, if in the US prices are not rigid then prices are not rigid anywhere else in the world? The study of US economics is not the same as the study of economics.<br /><br />The next line of defense? The level of market competition!Anonymousnoreply@blogger.com