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Price setting in General Equilibrium: Alternative Specifications

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Author Info
de Walque, G.
Smets, F.
Wouters, R.

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Abstract

This paper compares a number of alternative specifications for price setting in the context of the Smets-Wouters (2003) Dynamic Stochastic General Equilibrium model. We compare the Calvo model with a standard Taylor contracting model and show that by allowing for sector-specific capital the Taylor contracting model with relative short contract length is performing as well as the Calvo model

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Publisher Info
Paper provided by Society for Computational Economics in its series Computing in Economics and Finance 2005 with number 370.

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Date of creation: 11 Nov 2005
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Handle: RePEc:sce:scecf5:370

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Related research
Keywords: sticky prices; DSGE models; business cycle fluctuations;

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  1. Emmanuel Dhyne & Luis J. Álvarez & Hervé Le Bihan & Giovanni Veronese & Daniel Dias & Johannes Hoffmann & Nicole Jonker & Patrick Lünnemann & Fabio Rumler & Jouko Vilmunen, 2005. "Price setting in the euro area: some stylized facts from individual consumer price data," Working Paper Series 524, European Central Bank. [Downloadable!]
    Other versions:
  2. Ignazio Angelloni & Luc Aucremanne & Michael Ehrmann & Jordi Galí & Andrew Levin & Frank Smets, 2005. "New Evidence on Inflation Persistence and Price Stickiness in the Euro Area: Implications for Macro Modelling," Economics Working Papers 910, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
    Other versions:
  3. Gregory de Walque & Frank Smets & Rafael Wouters, 2006. "Firm-specific production factors in a DSGE model with Taylor price setting," Working Paper Series 648, European Central Bank. [Downloadable!]
    Other versions:
  4. Altig, David E & Christiano, Lawrence J. & Eichenbaum, Martin & Lindé, Jesper, 2005. "Firm-Specific Capital, Nominal Rigidities and the Business Cycle," CEPR Discussion Papers 4858, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  5. Dixon, Huw & Kara, Engin, 2008. "Can we explain inflation persistence in a way that is consistent with the micro-evidence on nominal rigidity?," Cardiff Economics Working Papers E2008/22, Cardiff University, Cardiff Business School, Economics Section. [Downloadable!]
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