A Unified Framework for Using Micro-Data to Compare Dynamic Wage and Price Setting Models

Huw David Dixon ()

No 3093, CESifo Working Paper Series from CESifo Group Munich

Abstract: This paper develops a statistical framework of steady-state identities which enable us to match the distributions of durations found in the micro-data to generalized Taylor and Calvo models of time-dependent pricing. We illustrate the approach with the UK micro CPI data for 2006-2009, and employ the pricing models in a simple macromodel. We find that the Generalized Taylor Economy generates a hump shaped response function, whilst the Generalized Calvo does not.

Keywords: price-spell; steady state; hazard rate; Calvo; Taylor (search for similar items in EconPapers)
JEL-codes: E50 (search for similar items in EconPapers)
Date: 2010
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