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Staggered Contracts and Business Cycle Persistence

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  • Huang, K.X.
  • Liu, Z.

Abstract

Staggered price and Staggered wage mechanisms are commonly viewed similar in generating persistent real effects of monetary shocks. In this paper, we distinguish these two mechanisms with individuals's optimizing behavior being explicitly taken into account. We show that, although the dynamic price and wage setting equations are alike, a key parameter governing persistence in these two equations is linked to the underlying preferences and technologies in very different ways.

Suggested Citation

  • Huang, K.X. & Liu, Z., 1999. "Staggered Contracts and Business Cycle Persistence," Papers 305, Minnesota - Center for Economic Research.
  • Handle: RePEc:fth:minner:305
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    References listed on IDEAS

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    More about this item

    Keywords

    MONETARY POLICY ; BUSINESS CYCLES;

    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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