ERIC Number: EJ696919
Record Type: Journal
Publication Date: 2005-Feb-1
Nominal Rigidities and the Dynamic Effects of a Shock to Monetary Policy.
Christiano, Lawrence J.; Eichenbaum, Martin; Evans, Charles L.
Journal of Political Economy, v113 n1 p1 Feb 2005
We present a model embodying moderate amounts of nominal rigidities that accounts for the observed inertia in inflation and persistence in output. The key features of our model are those that prevent a sharp rise in marginal costs after an expansionary shock to monetary policy. Of these features, the most important are staggered wage contracts that have an average duration of three quarters and variable capital utilization.
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Publication Type: Journal Articles
Education Level: N/A
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