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Technology Shocks and Monetary Policy in an Estimated Sticky Price Model of the US Economy

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Listed author(s):
  • Avouyi-Dovi, S.
  • Matheron, J.

Abstract

In this paper, we, seek to characterize the dynamic effects of permanent technology shocks and the way in which US monetary authorities reacted to these shocks over the sample 1955(1)--2002(4). To do so, we develop an augmented sticky price-sticky wage model of the business cycle, which is estimated by minimizing the distance between theoretical, dynamic responses of key variables to a permanent technology shock and their structural VAR counterparts. In a second step, we compare these responses with the outcome of the optimal monetary policy.

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File URL: https://publications.banque-france.fr/sites/default/files/medias/documents/working-paper_123_2005.pdf
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Paper provided by Banque de France in its series Working papers with number 123.

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Length: 55 pages
Date of creation: 2005
Handle: RePEc:bfr:banfra:123
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Banque de France 31 Rue Croix des Petits Champs LABOLOG - 49-1404 75049 PARIS

Web page: http://www.banque-france.fr/

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Keywords: Sticky prices and wages ; Taylor rule ; Optimal monetary policy.;

Find related papers by JEL classification:

  • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
  • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
  • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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