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| Title: | | Generalized Taylor and generalized Calvo price and wagesetting: Micro evidence with macro implications  |
| Authors: | | Dixon, Huw Le Bihan, Hervé |
| Issue Date: | | 2011 |
| Series/Report no.: | | Cardiff Economics Working Papers E2011/25 |
| Abstract: | | The Generalized Calvo and the Generalized Taylor models 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 and persistent 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: | | Cardiff Economics Working Papers
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