Endogenous Price Stickiness and Business Cycle Persistence

Michael Kiley

Journal of Money, Credit and Banking, 2000, vol. 32, issue 1, 28-53

Abstract: Sticky prices help generate persistent output fluctuations in response to aggregate demand shocks. This paper develops a model in which price stickiness is endogenous and generates persistent output fluctuations. Since the degree of price stickiness should be lower in high-inflation economies, output persistence should also be lower in high-inflation economies. Estimation of the model, as well as simple autocorrelations of detrended real output, suggest that, indeed, output fluctuations about trend are less persistent in high-inflation economies.

Date: 2000
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Working Paper: Endogenous Price Stickiness and Business Cycle Persistence (2019)
Working Paper: Endogenous price stickiness and business cycle persistence (1996)
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Persistent link: https://EconPapers.repec.org/RePEc:mcb:jmoncb:v:32:y:2000:i:1:p:28-53

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