Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/100952
Authors: 
Nason, James M.
Slotsve, George A.
Year of Publication: 
2004
Series/Report no.: 
Working Paper, Federal Reserve Bank of Atlanta 2004-9
Abstract: 
The new Keynesian Phillips curve (NKPC) has become central to monetary theory and policy. A seemingly benign NKPC prediction is that trend shocks dominate price level fluctuations at all forecast horizons. Since the NKPC cycle of the U.S. GDP deflator peaks at each of the last seven NBER dated recessions, support for the NKPC is limited. The authors develop monetary business cycle models that contain different combinations of nominal (sticky-price) and real (labor market search) rigidities to understand this puzzle. Simulations indicate that a model combining labor market search and flexible prices is better able to match actual price level movements than sticky-price models do. This model represents a challenge to claims that sticky prices are a key part of the monetary transmission mechanism.
Document Type: 
Working Paper

Files in This Item:
File
Size
568.97 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.