Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/65749
Authors: 
Dixon, Huw David
Year of Publication: 
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

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