The price puzzle revisited: can the cost channel explain a rise in inflation after a monetary policy shock?

This paper explores whether the cost channel solves the price puzzle. We set-up a New Keynesian DSGE model and estimate it for the euro area by adopting a minimum distance approach. Our findings suggest that - under certain parameter restrictions which are not rejected by the data - the cost channel helps to generate an initial rise of inflation after a monetary contraction.

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Year of publication:	2007
Authors:	Henzel, Steffen ; Hülsewig, Oliver ; Mayer, Eric ; Wollmershäuser, Timo
Publisher:	Munich : Center for Economic Studies and ifo Institute (CESifo)
Subject:	Transmissionsmechanismus \| Inflation \| Geldpolitik \| Schock \| Ungleichgewichtstheorie \| Theorie \| Schätzung \| EU-Staaten

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Series:	CESifo Working Paper ; 2039
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	538340568 [GVK] hdl:10419/26084 [Handle]
Classification:	C51 - Model Construction and Estimation ; E31 - Price Level; Inflation; Deflation ; E32 - Business Fluctuations; Cycles
Source:	EconStor

Persistent link: https://www.econbiz.de/10010264162