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The distribution of contract durations across firms: a unified framework for understanding and comparing dynamic wage and price setting models

Huw Dixon ()

No 148, Money Macro and Finance (MMF) Research Group Conference 2006 from Money Macro and Finance Research Group

Abstract: This paper shows how any steady state distribution of ages and related hazard rates can be represented as a distribution across firms of completed contract lengths. The distribution is consistnet with a Generalised Taylor Economy or a Generalised Calvo model with duration dependent reset probabilities. Equivalent distributions have different degrees of forward lookingness and imply different behaviour in response to monetary shocks. We also interpret data on the proportions of firms changing price in a period, and the resultant range of average contract lengths

Keywords: Contract length; steady state; hazard rate; Calvo; Taylor (search for similar items in EconPapers)
JEL-codes: E50 (search for similar items in EconPapers)
Date: 2007-02-02
New Economics Papers: this item is included in nep-cba and nep-mac
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http://repec.org/mmf2006/up.18658.1148130066.pdf (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:mmf:mmfc06:148

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