Gavin, William T.; Keen, Benjamin D.; Pakko, Michael R. - Federal Reserve Bank of St. Louis - 2007
nominal rigidity is in wage setting, then a higher value for θ
P
generates a lower
variance in inflation but a higher … this paper that nests the three alternative
versions: a flexible model, a sticky-price model, and a sticky-wage model. The … included to keep the real effects of policy from
having too large an impact in the sticky-price and sticky-wage models. Our …