Persistence and Nominal Inertia in a Generalized Taylor Economy: How Longer Contracts Dominate Shorter Contracts

Engin Kara and Huw Dixon

No 87, Computing in Economics and Finance 2005 from Society for Computational Economics

Abstract: n this paper we develop the Generalize Taylor Economy (GTE) in which there are many sectors with overlapping contracts of different lengths. We are able to show that even in economies with the same average contract length, monetary shocks will be more persistent when there are longer contracts. In particular we are able to solve the puzzle of why Calvo contracts appear to be more persistent than simple Taylor contracts: it is because the standard calibration of Calvo contracts is not correct

Keywords: Persistence; Taylor contract; Calvo (search for similar items in EconPapers)
JEL-codes: E24 E32 E50 E52 (search for similar items in EconPapers)
Date: 2005-11-11
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (25)

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http://repec.org/sce2005/up.17595.1106322004.pdf (application/pdf)

Related works:
Working Paper: Persistence and Nominal Inertia in a Generalized Taylor Economy: How Longer Contracts Dominate Shorter Contracts (2007)
Working Paper: Persistence and Nominal Inertia in a Generalized Taylor Economy: How Longer Contracts Dominate Shorter Contracts (2007)
Working Paper: Persistence and nominal inertia in a generalized Taylor economy: how longer contracts dominate shorter contracts (2005)
Working Paper: Persistence and Nominal Inertia in a Generalised Taylor Economy: How Loner Contracts Dominate Shorter Contracts (2005)
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