Does Money Illusion Matter? Reply
- Author(s)
- Ernst Fehr, Jean-Robert Tyran
- 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).
- Organisation(s)
- Department of Economics, Vienna Center for Experimental Economics
- External organisation(s)
- Universität Zürich (UZH)
- Journal
- The American Economic Review (Print Edition)
- Volume
- 104
- Pages
- 1063-1071
- No. of pages
- 9
- ISSN
- 0002-8282
- DOI
- https://doi.org/10.1257/aer.104.3.1063
- Publication date
- 03-2014
- Peer reviewed
- Yes
- Austrian Fields of Science 2012
- 502053 Economics
- Keywords
- ASJC Scopus subject areas
- Economics and Econometrics
- Portal url
- https://ucris.univie.ac.at/portal/en/publications/does-money-illusion-matter-reply(7d924659-18c1-4200-8062-ee391468e48b).html