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Using estimated models to assess nominal and real rigidities in the United Kingdom

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  • Kamber, Gunes

    ()
    (Reserve Bank of New Zealand)

  • Millard, Stephen

    ()
    (Bank of England)

Abstract

This paper aims to contribute to our understanding of inflation dynamics in the United Kingdom by estimating two dynamic stochastic general equilibrium models and assessing the role of nominal and real rigidities within them. We first obtain an empirical representation of the monetary transmission mechanism in the United Kingdom and then estimate the models by minimising the difference between this representation and its model equivalents. We find that both models can explain the data reasonably well without relying on undue amounts of price and wage stickiness.

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Bibliographic Info

Paper provided by Bank of England in its series Bank of England working papers with number 396.

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Length: 47 pages
Date of creation: 27 Jul 2010
Date of revision:
Handle: RePEc:boe:boeewp:0396

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Keywords: Minimum distance estimation; DSGE models; Nominal and real rigidities;

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Cited by:
  1. Huw Dixon & Hervé Le Bihan, 2012. "Generalised Taylor and Generalised Calvo Price and Wage Setting: Micro‐evidence with Macro Implications," Economic Journal, Royal Economic Society, vol. 122(560), pages 532-554, 05.
  2. Millard, Stephen, 2011. "An estimated DSGE model of energy, costs and inflation in the United Kingdom," Bank of England working papers 432, Bank of England.
  3. Julien Albertini & Güneş Kamber & Michael Kirker, 2012. "Estimated Small Open Economy Model With Frictional Unemployment," Pacific Economic Review, Wiley Blackwell, vol. 17(2), pages 326-353, 05.

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