A Note on Price Asymmetry Using a Monetary Model

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DOI: 10.4236/tel.2014.48088    2,955 Downloads   3,474 Views  

ABSTRACT

In this paper we present a macroeconomic foundation of downward money price inflexibility based on classical Monetary Economics. We show that under the principle of risk aversion and the neutral money axiom, our model derives an endogenous asymmetric price response as prices adjust more rapidly when they go upward than downward. This asymmetry does not disappear; on the contrary, it is increasing in time.

Cite this paper

Schiaffino, P. and Pinasco, J. (2014) A Note on Price Asymmetry Using a Monetary Model. Theoretical Economics Letters, 4, 697-701. doi: 10.4236/tel.2014.48088.

Conflicts of Interest

The authors declare no conflicts of interest.

References

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