EconPapers    
Economics at your fingertips  
 

Price and wage inflation inertia under time-dependent adjustments

Giovanni Di Bartolomeo () and Di Pietro Marco

wp.comunite from Department of Communication, University of Teramo

Abstract: We derive and estimate a small-scale DSGE model augmented with price and wage adjustment governed by a time-dependent mechanisms. Byusing positively sloping hazard functions, we micro-found price and wage inflation intrinsic persistence, as we derive price and wage Phillips curves characterized by both forward and backward terms for inflation. Our estimation confirms upward-sloping hazard functions. Finally, we compare the empirical performance of our model to several popular alternatives based on di¤erent price and wage adjustment mechanisms, including Calvo pricing. By comparing log-marginal likelihoods of di¤erent estimations, we find that our model clearly outperforms these alternatives.

Keywords: time-dependent price/wage adjustments; Calvo pricing; intrinsic inflation inertia; hybrid Phiilips curves; model comparison (search for similar items in EconPapers)
JEL-codes: E31 E32 E52 C11 (search for similar items in EconPapers)
Date: 2013-09
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://wp.comunite.it/data/wp_no_103_2013.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:ter:wpaper:0103

Access Statistics for this paper

More papers in wp.comunite from Department of Communication, University of Teramo
Series data maintained by Giovanni Di Bartolomeo ().

 
Page updated 2017-04-23
Handle: RePEc:ter:wpaper:0103