Welfare implications of Calvo vs. Rotemberg-pricing assumptions

Giovanni Lombardo and David Vestin

Economics Letters, 2008, vol. 100, issue 2, 275-279

Abstract: This paper compares the welfare implications of two widely used pricing assumptions in the New-Keynesian literature: Calvo-pricing vs. Rotemberg-pricing. We show that despite the strong similarities between the two assumptions to a first order of approximation, in general they might entail different welfare costs at higher order of approximation.

Date: 2008
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Working Paper: Welfare implications of Calvo vs. Rotemberg pricing assumptions (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:100:y:2008:i:2:p:275-279

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