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This note shows that full price indexation is not optimal in the long-run, in the New Keynesian model under trend … price indexation is partial. …
Persistent link: https://www.econbiz.de/10008562994
indexation on policymakers' ability to induce economic stability, and provide fresh evidence on the relationship between trend … inflation, wage indexation and determinacy in the post-WWII U.S. economic environment. Further simulations show that rising the …
Persistent link: https://www.econbiz.de/10010335299
indexation on policymakers' ability to induce economic stability, and provide fresh evidence on the relationship between trend … inflation, wage indexation and determinacy in the post-WWII U.S. economic environment. Further simulations show that rising the …
Persistent link: https://www.econbiz.de/10009651057
We investigate the link between inflation, growth and unemployment nesting a model of fair wages into one of endogenous growth of learning by doing and assuming that firms protect wages' purchasing power against inflation in exchange of worker's effort. Unemployment decreases with higher...
Persistent link: https://www.econbiz.de/10010700757
With positive trend inflation, the Taylor principle is not enough to guarantee a determinate equilibrium. We provide new theoretical results on restoring determinacy in New Keynesian models with positive trend inflation and combine these with new empirical findings on the Federal Reserve’s...
Persistent link: https://www.econbiz.de/10008645050
This paper develops a series of tests to check whether the New Keynesian nominal rigidity hypothesis on the output-inflation tradeoff withstands new evidence. In so doing, I summarize and evaluate different estimation methods that have been applied in the literature to address this hypothesis....
Persistent link: https://www.econbiz.de/10011112306
indexation on policymakers' ability to induce economic stability, and provide fresh evidence on the relationship between trend … inflation, wage indexation and determinacy in the post-WWII U.S. economic environment. Further simulations show that rising the …
Persistent link: https://www.econbiz.de/10010343856
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...
Persistent link: https://www.econbiz.de/10010343914
The Chicago Fed dynamic stochastic general equilibrium (DSGE) model is used for policy analysis and forecasting at the Federal Reserve Bank of Chicago. This article describes its specification and estimation, its dynamic characteristics and how it is used to forecast the US economy. In many...
Persistent link: https://www.econbiz.de/10010292149
This article shows that the "risk premium" shock in Smets and Wouters (2007) can be interpreted as a structural shock to the demand for safe and liquid assets such as short-term US Treasury securities. Several implications of this interpretation are discussed.
Persistent link: https://www.econbiz.de/10011460655