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The Impact of Monetary Shocks on Product and Wages: A neoclassical aggregated dynamic model

Pedro Vieira ()

FEP Working Papers from Universidade do Porto, Faculdade de Economia do Porto

Abstract: In this work, I present an extension of Kydland and Prescott’s (K&P) model. The extension is to consider that prices and wages are nominal and that economic agents anticipate the probability of occurrence of exogenous shocks. Once calibrated the model, I compute the nominal and real dynamic response to a monetary shock. The results observed are in agreement with the economic stylised facts: there are permanent nominal effects but only short-term real effects. An interesting issue to pursue in future research would be to quantify the influence of money in the business cycle and to compare the results obtained with those in the real model of K&P.

Keywords: Business Cycle; Economic nominal variable; Monetary shocks; Microfoundation. (search for similar items in EconPapers)
Pages: 11 pages
Date: 2003-07
New Economics Papers: this item is included in nep-dge, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:por:fepwps:132

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