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Basic assumptions of sticky price monetary analysis

The basic assumption of the sticky price monetary analysis method does not hold true in the short term for purchasing power parity. That is, due to the different adjustment speeds of the commodity market and the asset market, the price level in the commodity market is sticky and the adjustment is gradual, while The asset market is extremely responsive, and interest rates will adjust quickly to restore equilibrium to the money market;

In the long run, purchasing power parity can be established;

Uncovered interest rate parity will always be Established;

Taking small countries that are open to the outside world as the object of investigation, foreign prices and foreign interest rates can be regarded as exogenous variables or assumed to be constants.