Money Illusion and Nominal Inertia in Experimental Asset Markets

Publikation: Working paper › Forskning

Standard

Money Illusion and Nominal Inertia in Experimental Asset Markets. / Noussair, Charles N.; Richter, Gregers; Tyran, Jean-Robert.

2008.

Publikation: Working paper › Forskning

Harvard

Noussair, CN, Richter, G & Tyran, J-R 2008 'Money Illusion and Nominal Inertia in Experimental Asset Markets'. https://doi.org/10.2139/ssrn.1307717

APA

Noussair, C. N., Richter, G., & Tyran, J-R. (2008). Money Illusion and Nominal Inertia in Experimental Asset Markets. Univ. of Copenhagen Dept. of Economics Discussion Paper Nr. 08-29 https://doi.org/10.2139/ssrn.1307717

Vancouver

Noussair CN, Richter G, Tyran J-R. Money Illusion and Nominal Inertia in Experimental Asset Markets. 2008 nov. 29. https://doi.org/10.2139/ssrn.1307717

Author

Noussair, Charles N. ; Richter, Gregers ; Tyran, Jean-Robert. / Money Illusion and Nominal Inertia in Experimental Asset Markets. 2008. (Univ. of Copenhagen Dept. of Economics Discussion Paper; Nr. 08-29).

Bibtex

@techreport{15cec8f27e33450bb9c82acfe5cdd837,
title = "Money Illusion and Nominal Inertia in Experimental Asset Markets",
abstract = "We test whether large but purely nominal shocks affect real asset market prices. We subject a laboratory asset market to an exogenous shock, which either inflates or deflates the nominal fundamental value of the asset, while holding the real fundamental value constant. After an inflationary shock, nominal prices adjust upward rapidly and we observe no real effects. However, after a deflationary shock, nominal prices display considerable inertia and real prices adjust only slowly and incompletely toward the levels that would prevail in the absence of a shock. Thus, an asymmetry is observed in the price response to inflationary and deflationary nominal shocks.",
keywords = "money illusion, nominal inertia, asset market bubble, nominal loss aversion, laboratory experiment",
author = "Noussair, {Charles N.} and Gregers Richter and Jean-Robert Tyran",
year = "2008",
month = nov,
day = "29",
doi = "10.2139/ssrn.1307717",
language = "English",
series = "Univ. of Copenhagen Dept. of Economics Discussion Paper",
number = "08-29",
type = "WorkingPaper",

}

RIS

TY - UNPB

T1 - Money Illusion and Nominal Inertia in Experimental Asset Markets

AU - Noussair, Charles N.

AU - Richter, Gregers

AU - Tyran, Jean-Robert

PY - 2008/11/29

Y1 - 2008/11/29

N2 - We test whether large but purely nominal shocks affect real asset market prices. We subject a laboratory asset market to an exogenous shock, which either inflates or deflates the nominal fundamental value of the asset, while holding the real fundamental value constant. After an inflationary shock, nominal prices adjust upward rapidly and we observe no real effects. However, after a deflationary shock, nominal prices display considerable inertia and real prices adjust only slowly and incompletely toward the levels that would prevail in the absence of a shock. Thus, an asymmetry is observed in the price response to inflationary and deflationary nominal shocks.

AB - We test whether large but purely nominal shocks affect real asset market prices. We subject a laboratory asset market to an exogenous shock, which either inflates or deflates the nominal fundamental value of the asset, while holding the real fundamental value constant. After an inflationary shock, nominal prices adjust upward rapidly and we observe no real effects. However, after a deflationary shock, nominal prices display considerable inertia and real prices adjust only slowly and incompletely toward the levels that would prevail in the absence of a shock. Thus, an asymmetry is observed in the price response to inflationary and deflationary nominal shocks.

KW - money illusion

KW - nominal inertia

KW - asset market bubble

KW - nominal loss aversion

KW - laboratory experiment

U2 - 10.2139/ssrn.1307717

DO - 10.2139/ssrn.1307717

M3 - Working paper

T3 - Univ. of Copenhagen Dept. of Economics Discussion Paper

BT - Money Illusion and Nominal Inertia in Experimental Asset Markets

ER -

ID: 241647279