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http://hdl.handle.net/10419/65749
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| Title: | | A unifed framework for understanding and comparing dynamic wage and price setting models  |
| Authors: | | Dixon, Huw David |
| Issue Date: | | 2009 |
| Series/Report no.: | | Cardiff Economics Working Papers E2009/20 |
| Abstract: | | This paper argues that the cross-sectional approach to durations is essential to understand nominal rigidity because this captures the fact that price-spells are generated by firms' price-setting behavior. Since the distribution of durations is dominated by a proliferation of short contracts, the cross-sectional measure corrects for this by length-biased sampling. Modelling the price-spell durations in this way enables us to see how Taylor, Calvo and their generalizations relate to each other, and enable us to compare price-setting behavior for a given distribution of durations. We also show how the micro-data can be directly related to the macroeconomic pricing models in this setting. |
| Subjects: | | price-spell steady state hazard rate Calvo Taylor |
| JEL: | | E50 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Cardiff Economics Working Papers
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