Imperfect Competition, Differential Information, and Microfoundations of Macroeconomics

by Nishimura, Kiyohiko G.

• ISBN13: 9780198286172
• ISBN10: 0198286171
• Format: Hardcover
• Copyright: 1992-12-10
• Publisher: Oxford University Press

Summary

Using a macroeconomic model, Nishimura links a microeconomic model of imperfectly informed firms in monopolistic competition to a general theory of wage and price setting. His analysis is based on profit maximization and rational behavior, in line with the New Keynesian approach in its emphasis on the microeconomic foundations of macroeconomics. It shows that increased competition may increase nominal as well as real price rigidity and increased volatility of investment.

Table of Contents

Preface	p. vii
Introduction	p. 1
Nominal Price Rigidity	p. 33
The Predetermined-Price Economy	p. 35
Computation of the Bayesian Nash Equilibrium	p. 71
the Menu-Cost Model	p. 72
the Payoffs of the Predetermined-Price Strategy and the Perfect- Information Strategy When All Other Firms Adopt the Perfect-Information Strategy	p. 73
Social Welfare in the General Case	p. 74
the Second-Order Approximation of the Welfare Loss	p. 75
Notes	p. 76
Externality in Information Acquisition and the Non-Neutrality of Money	p. 81
Appendix: Equilibrium Characterization in the General Case	p. 98
Notes	p. 99
Indexation and Imperfect Insulation from Nominal Disturbances	p. 101
Appendix: a Macroeconomic Model with Differentiated Products and Differentiated Labour Inputs	p. 123
Pricing, Investment, and Competition	p. 125
Cost-Based Prices: Competition and Price Behaviour Under Correlated Shocks in Demand and Supply	p. 127
Appendix: Competitiveness in an Industry with Differentiated Products: the Own- Price Elasticity and the Number of Firms	p. 141
Competition and the Volatility of Investment	p. 143
Derivation of Rational Expectations	p. 160
the Case of Increasing Unit Variable Costs	p. 164
The Stochastic Expectational Equilibrium and Co-Ordination Failure in Expectation Formation	p. 167
Relative Price Rigidity: Consequences of Buyer Imperfect Information	p. 183
Customer Markets and Relative-Price Sensitivity	p. 185
Notes	p. 197
Consumer Search and Price Pledges	p. 199
References	p. 210
Index	p. 221
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