Generalized Taylor and Generalized Calvo price and wage-setting: micro evidence with macro implications

Huw Dixon and Hervé Le Bihan

Working papers from Banque de France

Abstract: The Generalized Calvo and the Generalized Taylor model of price and wage-setting are, unlike the standard Calvo and Taylor counterparts, exactly consistent with the distribution of durations observed in the data. Using price and wage micro-data from a major euro-area economy (France), we develop calibrated versions of these models. We assess the consequences for monetary policy transmission by embedding these calibrated models in a standard DSGE model. The Generalized Taylor model is found to help rationalizing the hump-shaped response of inflation, without resorting to the counterfactual assumption of systematic wage and price indexation.

Keywords: Contract length; steady state; hazard rate; Calvo; Taylor; wage-setting; price-setting. (search for similar items in EconPapers)
JEL-codes: E31 E32 E52 J30 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2011
New Economics Papers: this item is included in nep-cba, nep-dge, nep-eec and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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https://publications.banque-france.fr/sites/defaul ... g-paper_324_2011.pdf (application/pdf)

Related works:
Journal Article: Generalised Taylor and Generalised Calvo Price and Wage Setting: Micro‐evidence with Macro Implications (2012)
Working Paper: Generalized Taylor and Generalized Calvo price and wage-setting: micro evidence with macro implications (2011)
Working Paper: Generalized Taylor and Generalized Calvo Price and Wage-Setting: Micro Evidence with Macro Implications (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:324

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