Welfare implications of Calvo vs. Rotemberg-pricing assumptions
AbstractThis 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 different welfare costs at higher order of approximation.
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Bibliographic InfoArticle provided by Elsevier in its journal Economics Letters.
Volume (Year): 100 (2008)
Issue (Month): 2 (August)
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Web page: http://www.elsevier.com/locate/ecolet
Other versions of this item:
- Lombardo, Giovanni & Vestin, David, 2007. "Welfare implications of Calvo vs. Rotemberg pricing assumptions," Working Paper Series 0770, European Central Bank.
- E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
- E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
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