The Price Puzzle Revisited: Can the Cost Channel Explain a Rise in Inflation after a Monetary Policy Shock?
Eric Mayer () and
Timo Wollmershäuser ()
No 2039, CESifo Working Paper Series from CESifo Group Munich
This paper explores whether the cost channel solves the price puzzle. We set-up a New Keynesian DSGE model and estimate it for the euro area by adopting a minimum distance approach. Our findings suggest that - under certain parameter restrictions which are not rejected by the data - the cost channel helps to generate an initial rise of inflation after a monetary contraction.
Keywords: price puzzle; New Keynesian model; cost channel; minimum distance estimation (search for similar items in EconPapers)
JEL-codes: C51 E31 E32 (search for similar items in EconPapers)
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Journal Article: The price puzzle revisited: Can the cost channel explain a rise in inflation after a monetary policy shock? (2009)
Working Paper: The price puzzle revisited: Can the cost channel explain a rise in inflation after a monetary policy shock? (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_2039
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