This file is part of IDEAS , which uses RePEc data
[ Papers |
Articles |
Software |
Books |
Chapters |
Authors |
Institutions |
JEL Classification |
NEP reports |
Search |
New papers by email |
Author registration |
Rankings |
Volunteers |
FAQ |
Blog |
Help! ]
Endogenously persistent output dynamics: A puzzle for the sticky-price model? Author info | Abstract | Publisher info | Download info | Related research | Statistics Fabio Ghironi () (Boston College)
Additional information is available for the following
registered author(s):
I show that endogenously persistent output dynamics are not a puzzle for the standard sticky-price model once openness of the economy is taken into account. I make this point using a two-country, monetary model of macroeconomic interdependence under internationally incomplete asset markets with stationary net foreign asset dynamics. If asset markets are incomplete, price stickiness generates endogenous persistence in the cross-country GDP differential by introducing persistence in the dynamics of the relative price differential between the two economies. This results in the dependence of the current real GDP differential on its past value, as well as on the stock of net foreign assets accumulated in the previous period. The elasticity of the current GDP differential to its past value is sizable for standard parameter values, implying a quantitatively significant persistence effect through this channel. Endogenous persistence yields hump-shaped responses of GDP to productivity and monetary policy shocks.
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page . Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Paper provided by Boston College Department of Economics in its series Boston College Working Papers in Economics with number
527.
Download reference. The following formats are available: HTML
(with abstract ),
plain text
(with abstract ),
BibTeX ,
RIS (EndNote, RefMan, ProCite),
ReDIF
Length: 30 pages
Date of creation: 14 Mar 2002Date of revision:
Handle: RePEc:boc:bocoec:527Contact details of provider: Postal: Boston College, 140 Commonwealth Avenue, Chestnut Hill MA 02467 USA Phone: 617-552-3670 Fax: +1-617-552-2308 Email: Web page: http://fmwww.bc.edu/EC/ More information through EDIRC
For technical questions regarding this item, or to correct its listing, contact: (Christopher F Baum).
Keywords: dynamics ; incomplete markets ; persistence ; open economy ; sticky prices ; Find related papers by JEL classification: E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
This paper has been announced in the following NEP Reports :
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.: Ireland, Peter N., 2001.
"Sticky-price models of the business cycle: Specification and stability ,"
Journal of Monetary Economics ,
Elsevier, vol. 47(1), pages 3-18, February.
[Downloadable!] (restricted)
Other versions: Richard Clarida & Jordi Gali & Mark Gertler, 1999.
"The Science of Monetary Policy: A New Keynesian Perspective ,"
Journal of Economic Literature ,
American Economic Association, vol. 37(4), pages 1661-1707, December.
[Downloadable!] (restricted)
Other versions:
Clarida, Richard & Galí, Jordi & Gertler, Mark, 1999.
"The Science of Monetary Policy: A New Keynesian Perspective ,"
CEPR Discussion Papers
2139, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted) Clarida, R. & Gali, J. & Gertler, M., 1999.
"The Science of Monetary Policy: A New Keynesian Perspective ,"
Working Papers
99-13, C.V. Starr Center for Applied Economics, New York University.
[Downloadable!] Richard Clarida & Jordi Galí & Mark Gertler, 1997.
"The Science of Monetary Policy: A New Keynesian Perspective ,"
Economics Working Papers
356, Department of Economics and Business, Universitat Pompeu Fabra, revised Apr 1999.
[Downloadable!] Richard Clarida & Jordi Gali & Mark Gertler, 1999.
"The Science of Monetary Policy: A New Keynesian Perspective ,"
NBER Working Papers
7147, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted) Backus, David K & Kehoe, Patrick J & Kydland, Finn E, 1994.
"Dynamics of the Trade Balance and the Terms of Trade: The J-Curve? ,"
American Economic Review ,
American Economic Association, vol. 84(1), pages 84-103, March.
[Downloadable!] (restricted)
Other versions:
David K. Backus & Patrick J. Kehoe & Finn E. Kydland, 1992.
"Dynamics of the trade balance and the terms of trade: the S-curve ,"
Working Paper
9211, Federal Reserve Bank of Cleveland.
[Downloadable!] David Backus & Patrick J. Kehoe & Finn E. Kydland, 1992.
"Dynamics of the Trade Balance and the Terms of Trade: The S-Curve ,"
NBER Working Papers
4242, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted) Morten Ravn, .
"GAUSS code for Backus-Kehoe-Kydland ,"
QM&RBC Codes
106, Quantitative Macroeconomics & Real Business Cycles.
[Downloadable!] David Backus & Patrick Kehoe & Finn E. Kydland, 1992.
"Web interface for "Dynamics of the Trade Balance and the Terms of Trade: The J-Curve?" ,"
QM&RBC Codes
5a, Quantitative Macroeconomics & Real Business Cycles.
[Downloadable!] David Backus & Patrick Kehoe & Finn E. Kydland, 1992.
"DOS executable for "Dynamics of the Trade Balance and the Terms of Trade: The J-Curve?" ,"
QM&RBC Codes
5, Quantitative Macroeconomics & Real Business Cycles.
[Downloadable!] V. V. Chari & Patrick J. Kehoe & Ellen R. McGrattan, 2000.
"Sticky Price Models of the Business Cycle: Can the Contract Multiplier Solve the Persistence Problem? ,"
Econometrica ,
Econometric Society, vol. 68(5), pages 1151-1180, September.
Other versions: Obstfeld, Maurice & Rogoff, Kenneth, 1995.
"Exchange Rate Dynamics Redux ,"
CEPR Discussion Papers
1131, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted)
Other versions:
Maurice Obstfeld and Kenneth Rogoff., 1995.
"Exchange Rate Dynamics Redux ,"
Center for International and Development Economics Research (CIDER) Working Papers
C95-048, University of California at Berkeley.
Maurice Obstfeld & Kenneth Rogoff, 1996.
"Exchange Rate Dynamics Redux ,"
NBER Working Papers
4693, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted) Obstfeld, Maurice & Rogoff, Kenneth, 1995.
"Exchange Rate Dynamics Redux ,"
Journal of Political Economy ,
University of Chicago Press, vol. 103(3), pages 624-60, June.
[Downloadable!] (restricted) Uhlig, H., 1995.
"A toolkit for analyzing nonlinear dynamic stochastic models easily ,"
Discussion Paper
97, Tilburg University, Center for Economic Research.
[Downloadable!]
Other versions: Stephanie Schmitt-Grohe & Martin Uribe, 2001.
"Closing Small Open Economy Models ,"
Departmental Working Papers
200115, Rutgers University, Department of Economics.
[Downloadable!]
Other versions:
Stephanie Schmitt-Grohe & Martin Uribe, 2002.
"Closing Small Open Economy Models ,"
NBER Working Papers
9270, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted) Schmitt-Grohé, Stephanie & Uribe, Martín, 2002.
"Closing Small Open Economy Models ,"
CEPR Discussion Papers
3096, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted) Schmitt-Grohe, Stephanie & Uribe, Martin, 2003.
"Closing small open economy models ,"
Journal of International Economics ,
Elsevier, vol. 61(1), pages 163-185, October.
[Downloadable!] (restricted) Richard Clarida & Mark Gertler, 1996.
"How the Bundesbank Conducts Monetary Policy ,"
NBER Working Papers
5581, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Other versions:
Clarida, R. & Gertler, M., 1996.
"How the Bundesbank Conducts Monetary Policy ,"
Working Papers
96-14, C.V. Starr Center for Applied Economics, New York University.
[Downloadable!] Richard H. Clarida & Mark Gertler, 1997.
"How the Bundesbank Conducts Monetary Policy ,"
NBER Chapters ,
in: Reducing Inflation: Motivation and Strategy, pages 363-412
National Bureau of Economic Research, Inc.
[Downloadable!] Christina D. Romer & David H. Romer, 1997.
"Reducing Inflation: Motivation and Strategy ,"
NBER Books ,
National Bureau of Economic Research, Inc, number rome97-1.
Obstfeld, Maurice & Rogoff, Kenneth, 1983.
"Speculative Hyperinflations in Maximizing Models: Can We Rule Them Out? ,"
Journal of Political Economy ,
University of Chicago Press, vol. 91(4), pages 675-87, August.
[Downloadable!] (restricted)
Other versions: Michele Cavallo & Fabio Ghironi, 2000.
"Net Foreign Assets and the Exchange Rate: Redux Revived ,"
Boston College Working Papers in Economics
505, Boston College Department of Economics, revised 01 Feb 2002.
[Downloadable!]
Other versions: Roberts, John M, 1995.
"New Keynesian Economics and the Phillips Curve ,"
Journal of Money, Credit and Banking ,
Blackwell Publishing, vol. 27(4), pages 975-84, November.
[Downloadable!] (restricted)
Taylor, John B., 1993.
"Discretion versus policy rules in practice ,"
Carnegie-Rochester Conference Series on Public Policy ,
Elsevier, vol. 39(1), pages 195-214, December.
[Downloadable!] (restricted)
Fabio Ghironi, 2000.
"Macroeconomic Interdependence under Incomplete Markets ,"
Boston College Working Papers in Economics
471, Boston College Department of Economics, revised 07 Feb 2003.
[Downloadable!]
Other versions: Rotemberg, Julio J, 1982.
"Monopolistic Price Adjustment and Aggregate Output ,"
Review of Economic Studies ,
Blackwell Publishing, vol. 49(4), pages 517-31, October.
[Downloadable!] (restricted)
Julio J. Rotemberg & Michael Woodford, 1999.
"Interest Rate Rules in an Estimated Sticky Price Model ,"
NBER Chapters ,
in: Monetary Policy Rules, pages 57-126
National Bureau of Economic Research, Inc.
[Downloadable!]
Other versions: Heathcote, Jonathan & Perri, Fabrizio, 2002.
"Financial autarky and international business cycles ,"
Journal of Monetary Economics ,
Elsevier, vol. 49(3), pages 601-627, April.
[Downloadable!] (restricted)
Other versions: Campbell, John Y., 1994.
"Inspecting the mechanism: An analytical approach to the stochastic growth model ,"
Journal of Monetary Economics ,
Elsevier, vol. 33(3), pages 463-506, June.
[Downloadable!] (restricted)
Other versions: Lawrence J. Christiano & Martin Eichenbaum & Charles Evans, 2001.
"Nominal Rigidities and the Dynamic Effects of a Shock to Monetary Policy ,"
NBER Working Papers
8403, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Other versions:
Lawrence J. Christiano & Martin Eichenbaum & Charles L. Evans, 2001.
"Nominal rigidities and the dynamic effects of a shock to monetary policy ,"
Working Paper Series
WP-01-08, Federal Reserve Bank of Chicago.
[Downloadable!] Lawrence J. Christiano & Martin Eichenbaum & Charles Evans, 2001.
"Nominal rigidities and the dynamic effects of a shock to monetary policy ,"
Working Paper
0107, Federal Reserve Bank of Cleveland.
[Downloadable!] Lawrence J. Christiano & Martin Eichenbaum & Charles L. Evans, 2005.
"Nominal Rigidities and the Dynamic Effects of a Shock to Monetary Policy ,"
Journal of Political Economy ,
University of Chicago Press, vol. 113(1), pages 1-45, February.
Lawrence J. Christiano & Martin Eichenbaum & Charles Evans, 2001.
"Nominal rigidities and the dynamic effects of a shock to monetary policy ,"
Proceedings ,
Federal Reserve Bank of San Francisco, issue Jun.
[Downloadable!] Patrick J. Kehoe & Fabrizio Perri, 2002.
"International Business Cycles with Endogenous Incomplete Markets ,"
Econometrica ,
Econometric Society, vol. 70(3), pages 907-928, May.
[Downloadable!] (restricted)
Other versions: Clarida, Richard & Gali, Jordi & Gertler, Mark, 1998.
"Monetary policy rules in practice Some international evidence ,"
European Economic Review ,
Elsevier, vol. 42(6), pages 1033-1067, June.
[Downloadable!] (restricted)
Other versions:
Richard Clarida & Jordi Gali & Mark Gertler, 1997.
"Monetary Policy Rules in Practice: Some International Evidence ,"
NBER Working Papers
6254, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted) Clarida, Richard & Gali, Jordi & Gertler, Mark, 1997.
"Monetary Policy Rules in Practice: Some International Evidence ,"
Working Papers
97-32, C.V. Starr Center for Applied Economics, New York University.
[Downloadable!] Clarida, Richard & Galí, Jordi & Gertler, Mark, 1997.
"Monetary Policy Rules in Practice: Some International Evidence ,"
CEPR Discussion Papers
1750, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted) Rotemberg, Julio J & Woodford, Michael, 1992.
"Oligopolistic Pricing and the Effects of Aggregate Demand on Economic Activity ,"
Journal of Political Economy ,
University of Chicago Press, vol. 100(6), pages 1153-1207, December.
[Downloadable!] (restricted)
Other versions: Niki Papadopoulou, 2004.
"Sticky Prices, Limited Participation or Both? ,"
Working Papers
2004_3, Department of Economics, University of Glasgow.
[Downloadable!]
Weil, Philippe, 1989.
"Overlapping families of infinitely-lived agents ,"
Journal of Public Economics ,
Elsevier, vol. 38(2), pages 183-198, March.
[Downloadable!] (restricted)
Full
references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
Karen Dury & Özlem Oomen, .
"The real exchange rate and quality improvements ,"
Bank of England working papers
320, Bank of England.
[Downloadable!]
Access and
download statistics Did you know? There is a FAQ (frequently asked questions).
This page was last updated on 2009-11-13.
This information is provided to you by IDEAS at the Department of Economics , College of Liberal Arts and Sciences , University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics .