|Statement||Martin Eichenbaum, Jonas D.M. Fisher.|
|Series||Working paper series ;, WP-2003-23, Working paper series (Federal Reserve Bank of Chicago. Research Dept. : Online) ;, WP-2003-23.|
|Contributions||Fisher, Jonas D. M. 1965-|
|The Physical Object|
|LC Control Number||2004620121|
Get this from a library! Evaluating the Calvo Model of Sticky Prices. [Martin S Eichenbaum; Jonas D M Fisher] -- Can variants of the classic Calvo () model of sticky prices account for the statistical behavior of post-war US inflation? We develop and test versions of the model for which the answer to . Downloadable! Can variants of the classic Calvo () model of sticky prices account for the statistical behavior of post-war US inflation? We develop and test versions of the model for which the answer to this question is yes. We then investigate whether these models imply plausible degrees of inertia in price setting behavior by firms. We find that they do, but only if we depart from two. Mankiw and Reis found that the model of sticky information provided a good way of explaining inflation persistence. Evaluation of sticky information models. Sticky information models do not have nominal rigidity: firms or unions are free to choose different prices or wages for each period. It is the information that is sticky, not the prices. Sticky Information and Sticky Prices. In a framework similar to the Calvo model, I assume that there are two types of firms. The closed and open economy literatures work on evaluating the.
Evaluating the Calvo model of sticky prices "This paper studies the empirical performance of a widely used model of nominal rigidities: the Calvo model of sticky goods prices. We describe an extended version of this model with variable elasticity Contributor: Eichenbaum, Martin S. In this paper, we ask whether a small structural model with sticky prices and wages, embedding various modelling devices designed to increase the degree of strategic complementarity between price. 59 Interest Rate Rules in an Estimated Sticky Price Model (3) where p,(z) is the period t price of good z, PI is the price index defined by (4) and Y, measures aggregate demand for the composite good defined by equa- tion (2). One of the delays we assume is that households must choose their index of purchases Ci at date t - we show in Rotemberg and Woodford (). The Calvo model in both wage and price setting is augmented by the assumption that prices that are not reoptimized are partially indexed to past inﬂation rates.
We present a new way of empirically evaluating various sticky price models used to assess the degree of monetary non-neutrality. While menu cost models uniformly predict that price change skewness and dispersion fall with inflation, in the Calvo model both by: 3. Eichenbaum, Martin and Jonas D.M. Fisher (): “Evaluating the Calvo Model of Sticky Prices,” NBER WP Mankiw, N. Gregory and Ricardo Reis (): “Sticky Information vs. Sticky Prices: A Proposal to Replace the New Keynesian Phillips Curve,” Quartely Journal of File Size: KB. from both macro and micro studies. Also, as expected from the Calvo () model, the sum of coe¢ cients is not signi–cantly di⁄erent from unity. The lack of a full pass-through of observed marginal cost onto prices is also consistent with the Mankiw and Reis () Sticky Information Model, since this model assumes that –rms are not fully. Abstract. A Phillips curve is an equation which relates the unemployment rate, or some other measure of aggregate economic activity, to a measure of the inflation rate. Since there is a significant correlation between inflation and unemployment over some horizons, understanding this correlation should yield insight into the impulses the economy faces and the mechanisms that .