Supply shocks and the divine coincidence
- Authors
- Kim, Bae-Geun
- Issue Date
- Aug-2016
- Publisher
- ELSEVIER SCIENCE SA
- Keywords
- Supply shocks; Divine coincidence; Substitutability of inputs
- Citation
- ECONOMICS LETTERS, v.145, pp 210 - 213
- Pages
- 4
- Journal Title
- ECONOMICS LETTERS
- Volume
- 145
- Start Page
- 210
- End Page
- 213
- URI
- https://scholarworks.bwise.kr/cau/handle/2019.sw.cau/6686
- DOI
- 10.1016/j.econlet.2016.06.018
- ISSN
- 0165-1765
1873-7374
- Abstract
- Unlike the conventional view, Blanchard and Gali (2007) point out that supply shocks alone do not create a policy trade-off between stabilizing inflation and stabilizing the output gap. This paper shows that supply shocks can be a natural source of the trade-off by assuming that non-produced inputs are used in fixed proportions with output in the production process. The results can also be generalized to the case when the elasticity of substitution between non-produced inputs and labor is less than unity. (C) 2016 Elsevier B.V. All rights reserved.
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Collections - College of Business & Economics > School of Economics > 1. Journal Articles
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