Hyperbolic Discounting and the Phillips Curve
University College London - Department of Economics
Dennis J. Snower
University of Kiel - Institute for World Economics (IfW); Institute for the Study of Labor (IZA); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
IZA Working Paper No. 3477
Using a standard dynamic general equilibrium model, we show that the interaction of staggered nominal contracts with hyperbolic discounting leads to inflation having significant long-run effects on real variables.
Number of Pages in PDF File: 32
Keywords: inflation, unemployment, Phillips curve, nominal inertia, monetary policy, dynamic general equilibrium
JEL Classification: E20, E40, E50working papers series
Date posted: May 23, 2008
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