The price puzzle revisited: Can the cost channel explain a rise in inflation after a monetary policy shock?

Steffen Henzel, Oliver Hülsewig, Eric Mayer and Timo Wollmershäuser ()

Journal of Macroeconomics, 2009, vol. 31, issue 2, pages 268-289

Abstract: This paper explores whether the cost channel solves the price puzzle. We set-up a New Keynesian DSGE model and estimate it for the euro area by adopting a minimum distance approach. Our findings suggest that - under certain parameter restrictions which are not rejected by the data - the cost channel helps to generate an initial rise of inflation after a monetary contraction.

Keywords: Price; puzzle; New; Keynesian; model; Cost; channel; Minimum; distance; estimation (search for similar items in EconPapers)
Date: 2009

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Related works:
Working Paper: The Price Puzzle Revisited: Can the Cost Channel Explain a Rise in Inflation after a Monetary Policy Shock? (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:eee:jmacro:v:31:y:2009:i:2:p:268-289

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