Kiel Working Papers, Kiel Institute for World Economics
No 1802:
Inequality Aversion and the Long-Run Effectiveness of Monetary Policy: Bilateral versus Group Comparison
Steffen Ahrens
Abstract: In this paper we incorporate the two most prominent
approaches of inequality aversion, i.e. Fehr and Schmidt (1999) and Bolton
and Ockenfels (2000) into an otherwise standard New Keynesian macro model
and compare them with respect to their influence on the long-run
effectiveness of monetary policy. We find that the choice for Fehr and
Schmidt or Bolton and Ockenfels like preferences is of importance only for
the quantitative - but not the qualitative - effectiveness of monetary
policy in the long-run
Keywords: price stickiness, long-run Phillips curve, inequality aversion; (follow links to similar papers)
JEL-Codes: D03,; E20,; E31,; E50; (follow links to similar papers)
13 pages, November 2012
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