Sticky-Price Models of the Business Cycle: Specification and Stability

Peter Ireland

No 426, Boston College Working Papers in Economics from Boston College Department of Economics

Abstract: This paper focuses on the specification and stability of a dynamic, stochastic, general equilibrium model of the business cycle with sticky prices. Maximum likelihood estimates reveal that the data prefer a version of the model in which adjustment costs apply to the price level but not to the inflation rate. Formal hypothesis tests provide evidence of instability in the estimated parameters, concentrated in the Euler equation linking consumption growth to the interest rate.

Keywords: Sticky prices; Business Cycles (search for similar items in EconPapers)
JEL-codes: E31 E32 E52 (search for similar items in EconPapers)
Pages: 36 pages
Date: 1999-07-28
New Economics Papers: this item is included in nep-dge
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Citations: View citations in EconPapers (4)

Published in Journal of Monetary Economics, 2001, 47:1, 3-18.

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Related works:
Journal Article: Sticky-price models of the business cycle: Specification and stability (2001)
Working Paper: Sticky-Price Models of the Business Cycle: Specification and Stability (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:boc:bocoec:426

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