Does Money Illusion Matter?

Ernst Fehr and Jean-Robert Tyran

American Economic Review, 2001, vol. 91, issue 5, 1239-1262

Abstract: This paper shows that a small amount of individual-level money illusion may cause considerable aggregate nominal inertia after a negative nominal shock. In addition, our results indicate that negative and positive nominal shocks have asymmetric effects because of money illusion. While nominal inertia is quite substantial and long lasting after a negative shock, it is rather small after a positive shock.

JEL-codes: E31 E32 E51 E52 (search for similar items in EconPapers)
Date: 2001
Note: DOI: 10.1257/aer.91.5.1239
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (179)

Downloads: (external link)
http://www.aeaweb.org/articles.php?doi=10.1257/aer.91.5.1239 (application/pdf)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: Does Money Illusion Matter? (2000)
Working Paper: Does Money Illusion Matter?
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aecrev:v:91:y:2001:i:5:p:1239-1262

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Review is currently edited by Esther Duflo

More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().