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Title:Generalized Taylor and generalized Calvo price and wage-setting: Micro evidence with macro implications PDF Logo
Authors:Dixon, Huw David
Le Bihan, Hervé
Issue Date:2010
Series/Report no.:CESifo working paper Monetary Policy and International Finance 3119
Abstract:The Generalized Calvo and the Generalized Taylor model of price and wage-setting are, unlike the standard Calvo and Taylor counter-parts, exactly consistent with the distribution of durations observed in the data. Using price and wage micro-data from a major euro-area economy (France), we develop calibrated versions of these models. We assess the consequences for monetary policy transmission by embedding these calibrated models in a standard DSGE model. The Generalized Taylor model is found to help rationalizing the hump-shaped response of inflation, without resorting to the counterfactual assumption of systematic wage and price indexation.
Subjects:contract length
steady state
hazard rate
Calvo
Taylor
wage-setting
price-setting
JEL:E31
E32
E52
J30
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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