Price setting in General Equilibrium: Alternative Specifications
Grégory de Walque (),
Frank Smets and
Raf Wouters ()
No 370, Computing in Economics and Finance 2005 from Society for Computational Economics
This paper compares a number of alternative specifications for price setting in the context of the Smets-Wouters (2003) Dynamic Stochastic General Equilibrium model. We compare the Calvo model with a standard Taylor contracting model and show that by allowing for sector-specific capital the Taylor contracting model with relative short contract length is performing as well as the Calvo model
Keywords: sticky prices; DSGE models; business cycle fluctuations (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:sce:scecf5:370
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