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Staggered Nominal Contracts: Taylor Vs. Calvo

Author

Listed:
  • Jangyoul Kim

    (Hankuk University of Foreign Studies)

  • Gieyoung Lim

    (Hankuk University of Foreign Studies)

Abstract

This paper compares the Taylor type and the Calvo type staggering schemes in terms of their implications on the behavior of aggregate price and output following a monetary expansion. In the sticky nominal price case, it is shown that Calvo type staggering implies positive autocorrelations (i.e., monotone dampening) in price and output, while Taylor type staggering implies negative autocorrelations (i.e., oscillatory dampening). In the sticky nominal wage case, however, it is found that both types of staggering generate monotonically dampening responses of price and output. In other words, the qualitative implications of wage stickiness are robust to the choice of staggering schemes.

Suggested Citation

  • Jangyoul Kim & Gieyoung Lim, 2007. "Staggered Nominal Contracts: Taylor Vs. Calvo," Korean Economic Review, Korean Economic Association, vol. 23, pages 65-87.
    • Handle: RePEc:kea:keappr:ker-200706-23-1-04
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    References listed on IDEAS

    as
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    Keywords

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    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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