“(Econ Seminar) – The Effectiveness of Monetary Policy: Theory and Experiment” by King King Li
King King Li
Shanghai University of Finance and Economics
The objective of this project is to theoretically and experimentally investigate nominal price rigidity. It is an important question because nominal price rigidity determines whether monetary policy will have any real impact. However, nominal price rigidity is a puzzle in monetary economics, as if we assume nominal shocks be public information, and that the physical costs to adjust prices be negligible, then price level should respond immediately to changes in money supply. In this project, we will construct a theoretical model and test it in experiments. Our approach is to understand the relationship between behavioral tendencies of individuals and nominal rigidity.