NDLI: Poverty and Inequality are the Byproducts of Asymmetric Monetary Policy?

Content Provider	IEEE Xplore Digital Library
Author	Shi Lei Cao Yong-qin Li Ze-xiang
Copyright Year	2007
Description	Author affiliation: Fudan Univ., Shanghai (Shi Lei)
Abstract	We study asymmetric monetary policy's influences on poverty with menu costs model. Price rigidity causes the asymmetric output-price adjustment, so monetary policy has asymmetric effect that the expansion causes insignificant climbing output and substantial higher price level, but the contraction leads to significant output loss and inconspicuous downward price. The contraction policy is larger than the expansion for keeping price level stable, so the boom-bust cycle raises average poverty. Poverty is caused by the alternate expansionary and contractive monetary policy which is called cost of stability, so it is byproduct of asymmetric monetary policy. It changes the trade-off between unemployment and inflation, which determines the Phillips Curve depending on Tobin's binding wage-floor and Eckstein-Brinner partial-ignorance effects. We testify that there exists optimum inflation rate satisfying to stabilize macroeconomy and improve poverty simultaneously. This paper induces the Philips Curve from a new view of asymmetric monetary policy, and suggests structural and loose inflation-target monetary policy should improve poverty in the transitional economy like China.
Starting Page	1213
Ending Page	1219
File Size	4990827
Page Count	7
File Format	PDF
ISBN	9787560322780
DOI	10.1109/ICMSE.2007.4422011
Language	English
Publisher	Institute of Electrical and Electronics Engineers, Inc. (IEEE)
Publisher Date	2007-08-20
Publisher Place	China
Access Restriction	Subscribed
Rights Holder	HARBIN INSTITUTE OF TEC
Subject Keyword	Economics Costs Stability Conference management Educational institutions asymmetry poverty and inequality inflation rate Unemployment menu cost monetary policy Engineering management Employment Macroeconomics Testing
Content Type	Text
Resource Type	Article

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