Does Money Illusion Matter? Reply

Ernst Fehr; Jean-Robert Tyran

doi:10.1257/aer.104.3.1063

Does Money Illusion Matter? Reply

Ernst Fehr
, Jean-Robert Tyran

Publications: Contribution to journal › Article › Peer Reviewed

Abstract

The data in Fehr and Tyran (2001) and Petersen and Winn (2014) show that money illusion plays an important role in nominal price adjustment after a fully anticipated negative monetary shock. Money illusion affects subjects' expectations, and causes pronounced nominal inertia after a negative shock but much less inertia after a positive shock. Thus Petersen and Winn (2014) provide a misleading interpretation of both our and their own data. (JEL C92, D83, D84, E31, E32, E52).

Original language	English
Pages (from-to)	1063-1071
Number of pages	9
Journal	The American Economic Review (Print Edition)
Volume	104
Issue number	3
DOIs	https://doi.org/10.1257/aer.104.3.1063
Publication status	Published - Mar 2014

Austrian Fields of Science 2012

502053 Economics

Keywords

IB
CMI
Cat1
VWL
VCEE

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10.1257/aer.104.3.1063

Cite this

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abstract = "The data in Fehr and Tyran (2001) and Petersen and Winn (2014) show that money illusion plays an important role in nominal price adjustment after a fully anticipated negative monetary shock. Money illusion affects subjects' expectations, and causes pronounced nominal inertia after a negative shock but much less inertia after a positive shock. Thus Petersen and Winn (2014) provide a misleading interpretation of both our and their own data. (JEL C92, D83, D84, E31, E32, E52).",

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AB - The data in Fehr and Tyran (2001) and Petersen and Winn (2014) show that money illusion plays an important role in nominal price adjustment after a fully anticipated negative monetary shock. Money illusion affects subjects' expectations, and causes pronounced nominal inertia after a negative shock but much less inertia after a positive shock. Thus Petersen and Winn (2014) provide a misleading interpretation of both our and their own data. (JEL C92, D83, D84, E31, E32, E52).

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KW - Cat1

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KW - VCEE

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Does Money Illusion Matter? Reply

Abstract

Austrian Fields of Science 2012

Keywords

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