Altig, David; Christiano, Lawrence; Eichenbaum, Martin; … - In: Review of Economic Dynamics 14 (2011) 2, pp. 225-247
This paper formulates and estimates a three-shock US business cycle model. The estimated model accounts for a substantial fraction of the cyclical variation in output and is consistent with the observed inertia in inflation. This is true even though firms in the model reoptimize prices on...