Hyperbolic Discounting and the Phillips Curve

  1. LIAM GRAHAM,
  2. DENNIS J. SNOWER

Article first published online: 29 MAR 2008

DOI: 10.1111/j.1538-4616.2008.00120.x

Issue

Journal of Money, Credit and Banking

Journal of Money, Credit and Banking

Volume 40, Issue 2-3, pages 427–448, March/April 2008

Additional Information

How to Cite

GRAHAM, L. and SNOWER, D. J. (2008), Hyperbolic Discounting and the Phillips Curve. Journal of Money, Credit and Banking, 40: 427–448. doi: 10.1111/j.1538-4616.2008.00120.x

Author Information

  1. Liam Grahamis from the Department of Economics, University College London, Gower Street, London WC1E 6BT, UK (E-mail:Liam.Graham@ucl.ac.uk). Dennis J. Snoweris from the Kiel Institute for the World Economy, Duesternbrooker Weg 120, 24105 Kiel, Germany (E-mail:Dennis.Snower@ifw-kiel.de).

Publication History

  1. Issue published online: 29 MAR 2008
  2. Article first published online: 29 MAR 2008
  3. Received October 26, 2006; and accepted in revised form August 1, 2007.

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Keywords:

  • E20;
  • E40;
  • E50
  • inflation;
  • unemployment;
  • Phillips curve;
  • nominal inertia;
  • monetary policy;
  • dynamic general equilibrium

Using a standard dynamic general equilibrium model, we show that the interaction of staggered nominal contracts with hyperbolic discounting leads to inflation having significant long-run effects on real variables.

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