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Price resetting and inertia

Author

Listed:
  • Collard, Fabrice
  • Dellas, Harris
Abstract
The Calvo scheme represents the standard specification of price resetting in the New Keynesian model. We show that using this rather than a fixed duration (Taylor) scheme matters importantly for the dynamics of the model as it allows it to generate hump-shaped response of output without an "excessive" average duration of price spells.

Suggested Citation

  • Collard, Fabrice & Dellas, Harris, 2010. "Price resetting and inertia," Journal of Macroeconomics, Elsevier, vol. 32(1), pages 28-34, March.
    • Handle: RePEc:eee:jmacro:v:32:y:2010:i:1:p:28-34
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    References listed on IDEAS

    as
    1. N. Gregory Mankiw & Ricardo Reis, 2002. "Sticky Information versus Sticky Prices: A Proposal to Replace the New Keynesian Phillips Curve," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(4), pages 1295-1328.
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    6. repec:nbr:nberre:0126 is not listed on IDEAS
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