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Optimal Sticky Prices under Rational Inattention

Maćkowiak, Bartosz - 2009

This paper presents a model in which price setting firms decide what to pay attention to, subject to a constraint on information flow. When idiosyncratic conditions are more variable or more important than aggregate conditions, firms pay more attention to idiosyncratic conditions than to...

Persistent link: https://www.econbiz.de/10012765187

On Implications of Micro Price Data for Macro Models

Maćkowiak, Bartosz - 2008

We review the recent literature that studies new, detailed micro data on prices. We discuss implications of the new micro data for macro models. We argue that the new micro data are helpful for macro models, but not decisive. There is no simple mapping from the frequency of price changes in...

Persistent link: https://www.econbiz.de/10012769307

The Elusive Welfare Economics of Price Stability as a Monetary Policy Objective : Why New Keynesian Central Bankers Should Validate Core Inflation

Buiter, Willem H. - 2021

The paper studies the inflation rate associated with optimal monetary and fiscal policy in a number of standard dynamic …, optimal inflation policy requires the validation, that is, the full accommodation of core producer inflation by actual … producer price inflation; (2) Optimal monetary policy implements Bailey-Friedman optimal quantity of money rule. No welfare …

Persistent link: https://www.econbiz.de/10013317652

Credit risk transfers and the macroeconomy

Faia, Ester - 2010

exacerbate the effect of productivity and other macroeconomic shocks on output and inflation. By offering a possibility of …

Persistent link: https://www.econbiz.de/10011605302

Endogenous Growth, Downward Wage Rigidity and Optimal Inflation

Abbritti, Mirko; Consolo, Agostino; Weber, Sebastian - 2021

Standard New Keynesian (NK) models feature an optimal inflation target well below two percent, limited welfare losses …-run Phillips curve between inflation and unemployment and a trade-off between price distortions and output hysteresis that change … the welfare-maximizing inflation level. For a plausible set of parameters, the optimal inflation target is in excess of …

Persistent link: https://www.econbiz.de/10013309815

Involuntary unemployment and the business cycle

Christiano, Lawrence; Trabandt, Mathias; Walentin, Karl - 2010

capital and use the resulting model to discuss the concept of the ‘non-accelerating inflation rate of unemployment’. We then …

Persistent link: https://www.econbiz.de/10011605248

On implications of micro price data for macro models

Maćkowiak, Bartosz; Smets, Frank - 2008

Persistent link: https://www.econbiz.de/10011605006

Optimal sticky prices under rational inattention

Maćkowiak, Bartosz; Wiederholt, Mirko - 2009

Persistent link: https://www.econbiz.de/10011605055

Welfare implications of Calvo vs. Rotemberg pricing assumptions

Lombardo, Giovanni; Vestin, David - 2007

This paper compares the welfare implications of two widely used pricing assumptions in the New-Keynesian literature: Calvo-pricing vs. Rotemberg-pricing. We show that despite the strong similarities between the two assumptions to a first order of approximation, in general they might entail...

Persistent link: https://www.econbiz.de/10011604816

Market Power and Fiscal Policy in OECD Countries

Afonso, António - 2010

We compute average mark-ups as a measure of market power throughout time and study their interaction with fiscal policy and macroeconomic variables in a VAR framework. From impulse-response functions the results, with annual data for a set of 14 OECD countries covering the period 1970-2007, show...

Persistent link: https://www.econbiz.de/10013145150