Sticky price models of the business cycle: Can the roundabout production solve the persistence puzzle?
Salaheddine El Omari
Economics Letters, 2017, vol. 160, issue C, 67-72
This paper considers the persistence puzzle unveiled by Chari et al. (2000). Our findings show that endogenously persistent output dynamics are not a puzzle for the standard sticky-price model once roundabout production is taken into account. We make this point using a new-Keynesian framework emphasizing an inertial mechanism called the multiplier for price stickiness in the spirit of Basu (1995).
Keywords: Endogenous propagation; Persistence puzzle; Sticky-price model; Roundabout production structure (search for similar items in EconPapers)
JEL-codes: E32 E52 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:160:y:2017:i:c:p:67-72
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