Rabanal, Pau; Rubio-Ramirez, Juan F. - In: Economic Review (2003) Q2, pp. 43-55
rationally. The simplest version of such models includes only one type of nominal rigidity, either sticky prices or sticky wages …-that is, prices or wages that adjust only slowly to market shortages or surpluses. But these simple models have a drawback … rate persistence is assumed. The findings also show that a model with both sticky prices and sticky wages can replicate …