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Price resetting and inertia

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  • Collard, Fabrice
  • Dellas, Harris

Abstract

The Calvo scheme represents the standard specification of price resetting in the New Keynesian model. We show that using this rather than a fixed duration (Taylor) scheme matters importantly for the dynamics of the model as it allows it to generate hump-shaped response of output without an "excessive" average duration of price spells.

Suggested Citation

  • Collard, Fabrice & Dellas, Harris, 2010. "Price resetting and inertia," Journal of Macroeconomics, Elsevier, vol. 32(1), pages 28-34, March.
    • Handle: RePEc:eee:jmacro:v:32:y:2010:i:1:p:28-34
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    References listed on IDEAS

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