The popular Calvo model with indexation (Christiano, Eichenbaum and Evans, 2005) and sticky information (Mankiw and Reis, 2002) model have guided much of the monetary policy discussion. The strength of these approaches is that they can explain the persistence of inflation. However, both of these...

The existence of nominal rigidities and inflation differentials between countries offers two of the main rationales for an inflation buffer in a monetary union where monetary policy is oriented towards an area-wide inflation objective. Evidence accumulated since 2003 suggests that nominal...

In most European countries, money wages are given in collective agreements or individual employment contracts, and the employer cannot unilaterally cut wages, even after the expiration of a collective agreement. Ceteris paribus, workers have a stronger bargaining position when they try to...

The correlation between persistent changes in the markup in one sector of an economy and the inflation rate is quantified in a 2-sector dynamic general equilibrium model. How this relationship is affected by monetary policy is also studied. We find that the correlation is in general positive...

We study the output costs of a reduction in monetary growth in a dynamic general equilibrium model with staggered wages. The money wage is fixed for two periods, and is chosen according to intertemporal optimisation. Agents have labour market monopoly power. We show that the introduction of...

We study the output costs of a reduction in monetary growth in a dynamic general equilibrium model with staggered wages. The money wage is fixed for two periods, and is chosen according to intertemporal optimisation. Agents have labour market monopoly power. We show that the introduction of...

We compare two widely used pricing assumptions in the New-Keynesian literature: the Calvo and Rotemberg price-setting mechanisms. We show that, once trend in?ation is taken into account, the two models are very different. i) The long-run relationship between inflation and output is positive in...

We apply classical econometric method to characterize the dynamic behavior of the quarter-on-quarter inflation over the period 1997q1-2010q1. In particular, we estimate univariate autoregressive (AR) models for the aggregate consumer price inflation series and as well as for the consumer price...

This paper compares sticky-price and sticky-information model under a more general staggering price-setting scheme. Different to Mankiw and Reis (2002), who show that, under the Calvo staggering assumption, two models generate very different inflation dynamics, I extend the constant-hazard...

This paper investigates the consequences of introducing endogenous price stickiness into a standard monetary policy model. We find that the modification reduces the optimal degree of inflation stabilization to which the central bank should commit. The reason is that less inflation stabilization...