TITLE:
A Note on Price Asymmetry Using a Monetary Model
AUTHORS:
Pablo L. Schiaffino, Juan Pablo Pinasco
KEYWORDS:
Price Asymmetry, Monetary Model, Sticky Prices, Classical Economics
JOURNAL NAME:
Theoretical Economics Letters,
Vol.4 No.8,
October
22,
2014
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.