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dc.contributor.author Rabanal, P
dc.contributor.author Rubio-Ramírez, JF
dc.date.accessioned 2010-03-09T15:36:17Z
dc.date.issued 2005-09-01
dc.identifier.citation Journal of Monetary Economics, 2005, 52 (6), pp. 1151 - 1166
dc.identifier.issn 0304-3932
dc.identifier.uri http://hdl.handle.net/10161/1975
dc.description.abstract The baseline New Keynesian model cannot replicate the observed persistence in inflation, output, and real wages for sensible parameter values. As a result, several extensions have been suggested to improve its fit to the data. We use a Bayesian approach to estimate and compare the baseline sticky price model of Calvo's [1983. Staggered prices in a utility maximizing framework. Journal of Monetary Economics 12, 383-398.] and three extensions. Our empirical results are as follows. First, we find that adding price indexation improves the fit of Calvo's [1983. Staggered prices in a utility maximizing framework. Journal of Monetary Economics 12, 383-398.] model. Second, models with both staggered price and wage setting dominate models with only price rigidities. Third, introducing wage indexation does not significantly improve the fit. Fourth, all model estimates suggest a high degree of price stickiness. Fifth, the estimates of labor supply elasticity are higher in models with both staggered price and wage contracts. Finally, the estimated inflation parameters of the Taylor rule are stable across models. © 2005 Elsevier B.V. All rights reserved.
dc.format.extent 1151 - 1166
dc.format.mimetype application/pdf
dc.language.iso en_US
dc.relation.ispartof Journal of Monetary Economics
dc.relation.isversionof 10.1016/j.jmoneco.2005.08.008
dc.title Comparing New Keynesian models of the business cycle: A Bayesian approach
dc.type Journal Article
dc.department Economics
pubs.issue 6
pubs.organisational-group /Duke
pubs.organisational-group /Duke/Faculty
pubs.publication-status Published
pubs.volume 52

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