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Essays on sluggishness in macroeconomics

Tsuruga, Takayuki
http://rave.ohiolink.edu/etdc/view?acc_num=osu1117222245

Abstract Details

2005, Doctor of Philosophy, Ohio State University, Economics.
My dissertation studies sluggishness in macroeconomics. It consists of three essays. The first essay (Chapter 1) develops a model which can explain the hump-shaped impulse response of inflation to a monetary shock. A standard New Keynesian (NK) model is augmented to include a dynamic externality as well as sticky wages and variable capital utilization. In simulations, I assume purely forward-looking nominal rigidities in nominal prices and wages a la Calvo. Nevertheless, we can show that inflation is hump-shaped under a reasonable range of parameters. It will be also shown that, in order for inflation to be hump-shaped, sticky wages and variable capital utilization are important as well as a dynamic externality. The second essay (Chapter 2) studies the role of the information updating scheme in the sticky information model. I compare the predictions of the sticky information model under two different information updating schemes: Mankiw and Reis' original updating scheme and an updating scheme where all firms do so deterministically. On the surface, both models are reasonable a priori. However, the sticky information model under our alternative scheme suffers from diminished persistence and a reduced hump shape in its impulse response function for inflation. The attractive results in Mankiw and Reis critically depend on their information updating scheme. Third essay (Chapter 3) extends the sticky information model by Mankiw and Reis. They apply the sticky information assumption to a model in which everything is originally static and the optimal choice is made in a static manner. In contrast, this essay considers a dynamic model in which the optimal choice is originally made dynamically due to adjustment costs. This essay applies the sticky information assumption to this type of dynamic model. A useful aggregation result with sticky information is shown. Using the neoclassical model of investment, fixed investment tends to have a hump-shaped response to a shock to profitability and to have additional persistence notwithstanding the model's simplicity.
Paul Evans (Advisor)
106 p.
Inflation; Sticky prices; New Keynesian Phillips curve; Dynamic externality; Sticky information; Investment

Recommended Citations

Citations

  • Tsuruga, T. (2005). Essays on sluggishness in macroeconomics [Doctoral dissertation, Ohio State University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=osu1117222245

    APA Style (7th edition)

  • Tsuruga, Takayuki. Essays on sluggishness in macroeconomics. 2005. Ohio State University, Doctoral dissertation. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=osu1117222245.

    MLA Style (8th edition)

  • Tsuruga, Takayuki. "Essays on sluggishness in macroeconomics." Doctoral dissertation, Ohio State University, 2005. http://rave.ohiolink.edu/etdc/view?acc_num=osu1117222245

    Chicago Manual of Style (17th edition)

osu1117222245
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© 2005, all rights reserved.
This open access ETD is published by The Ohio State University and OhioLINK.