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

The authors’ model, embodying moderate amounts of nominal rigidities, accounts for the observed inertia in inflation and persistence in output. The key features of their 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
Institutions:	Federal Reserve Bank of Cleveland
Subject:	Inflation (Finance) \| Monetary policy \| Wages

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Extent:	application/pdf
Series:	Working Paper.
Type of publication:	Book / Working Paper
Language:	English
Notes:	Number 0107
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005428259