Sticky Information vs. Sticky Prices: A Horse Race in a DSGE Framework

Mathias Trabandt

No 543, 2004 Meeting Papers from Society for Economic Dynamics

Abstract: Mankiw and Reis (2002) have proposed sticky information as an alternative to Calvo sticky prices in order to model the conventional view that i) inflation reacts with delay and gradually to a monetary policy shock, ii) announced and credible disinflations are contractionary and iii) inflation accelerates with vigorous economic activity. We develop a fully-fledged DSGE model with sticky information and compare it to Calvo sticky prices, allowing also for dynamic inflation indexation as in Christiano, Eichenbaum and Evans (2001). We find that both models do equally well in delivering the conventional view

Keywords: sticky information; sticky prices; inflation indexation; DSGE (search for similar items in EconPapers)
JEL-codes: E0 E3 (search for similar items in EconPapers)
Date: 2004
New Economics Papers: this item is included in nep-dge and nep-mac
References: Add references at CitEc
Citations: View citations in EconPapers (10)

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Related works:
Working Paper: Sticky Information vs. Sticky Prices: A Horse Race in a DSGE Framework (2007)
Working Paper: Sticky Information vs. Sticky Prices: A Horse Race in a DSGE Framework (2007)
Working Paper: Sticky Information vs. Sticky Prices: A Horse Race in a DSGE Framework (2003)
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