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

Sanvi Avouyi-Dovi and Julien Matheron ()

Working papers from Banque de France

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.

Keywords: Sticky prices and wages; Taylor rule; Optimal monetary policy. (search for similar items in EconPapers)
JEL-codes: E31 E32 E58 (search for similar items in EconPapers)
Date: 2005
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Persistent link: http://EconPapers.repec.org/RePEc:bfr:banfra:123

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