Sentences with phrase «aggregate demand shocks»

So stabilisation in response to aggregate demand shocks can be perfect, if the central bank wants it to be.

But firms who change their prices twice as frequently should only get half the weight; because they can adjust to aggregate demand shocks twice as easily, and have only half the need for the central bank to adjust aggregate demand so they don't have to change prices.

The nominal exchange rate would have to return to its long run value following an aggregate demand shock.

Not exact matches

If the Fed were to respond to weaker real output resulting from a negative supply shock by taking actions to stimulate aggregate demand, higher inflation would be the ultimate result, not higher real output.

This puzzle generated a flurry of research and several Nobel prizes, and one of the things that came out is that increasing aggregate demand (expansionary fiscal policy and or expansionary monetary policy) will not offset a negative productivity shock.

The whole point of inflation forecast targeting is that the Bank of Canada does not «accommodate» any shock to Aggregate Demand that would change its internal forecast of future output and hence future inflation.

The Bank is supposed to respond to new information about any shock to Aggregate Demand to prevent that shock affecting its forecast of inflation, whether that shock is positive or negative.