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

Mathias Trabandt

No 1369, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: How can we explain the observed behavior of aggregate inflation in response to e.g. monetary policy changes? 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. I use 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 (2005). I find that sticky information and sticky prices with dynamic inflation indexation do equally well in my DSGE model 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: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (37)

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/17881/1/kap1369.pdf (application/pdf)

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 (2004)
Working Paper: Sticky Information vs. Sticky Prices: A Horse Race in a DSGE Framework (2003)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1369

Access Statistics for this paper

More papers in Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel) Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().