Arbeitspapier
The rigidity bias
We study the basic economic problem of choice between long-term and short-term commitments under a general characterization of uncertainty (aggregate uncertainty).When contingencies are contractible, a perfect market of Arrow-Debreau contingent claims implements the social optimum.When contingencies are not contractible, long-term commitments receive too much weight in individual portfolios.The economy as a whole is too rigid during periods of high aggregate shocks.The model links a rigidity bias with the operation of the price mechanism and the monetary system.
- ISBN
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952-462-100-2
- Language
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Englisch
- Bibliographic citation
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Series: Bank of Finland Discussion Papers ; No. 31/2003
- Classification
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Wirtschaft
- Subject
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liquidity
central banking
monetary system
- Event
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Geistige Schöpfung
- (who)
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Herrala, Risto
- Event
-
Veröffentlichung
- (who)
-
Bank of Finland
- (where)
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Helsinki
- (when)
-
2003
- Handle
- Last update
-
10.03.2025, 11:44 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Herrala, Risto
- Bank of Finland
Time of origin
- 2003
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