Money Illusion and Strategic Complementarity as Causes of Monetary Non-Neutrality
Book description
In principle, money illusion could explain the inertial adjustment of prices after changes of monetary policy. Hence, money illusion could provide an explanation of monetary non-neutrality. However, this explanation has been thoroughly discredited in modern economics. As a consequence, economists have ever since the 1970s searched for alternative explanations for…
Why read it?
1 author picked Money Illusion and Strategic Complementarity as Causes of Monetary Non-Neutrality as one of their favorite books. Why do they recommend it?
This book is more scientific, but very interesting if you like to dig more into the depth of money illusion backed by its experimental investigation.
The old concept of money illusion is updated and transformed into its modern version, which is built on the principle of strategic complementarity. In this case, even a negligible individual money illusion suffered by only few agents might multiply effects of money illusion at the aggregate level due to a well-known mainstream concept called coordination failure. Modern money illusion might be responsible for substantial effects at the aggregate level.
For me, this book is very…
From Helena's list on economic reads about money illusion.
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