Nominal rigidities and the dynamic effects of a shock to monetary policy

We present a model embodying moderate amounts of nominal rigidities which accounts for the observed inertia in inflation and persistence in output. The key features of our model are those that prevent a sharp rise in marginal costs after an expansionary shock to monetary policy. Of these features, the most important are staggered wage contracts of average duration three quarters, and variable capital utilization.

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Year of publication:	2001
Authors:	Christiano, Lawrence J. ; Eichenbaum, Martin ; Evans, Charles
Published in:	Proceedings. - Federal Reserve Bank of San Francisco. - 2001, Jun
Publisher:	Federal Reserve Bank of San Francisco
Subject:	Monetary policy \| Wages \| Capital

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Extent:	application/pdf
Type of publication:	Article
Notes:	Published in Nominal rigidities : a conference (2001: June 16)
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005372705