Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/83904
Authors: 
Páez-Farrell, Juan
Year of Publication: 
2006
Series/Report no.: 
Cardiff Economics Working Papers E2006/17
Abstract: 
This paper evaluates sticky-price models using the methods proposed by Burns and Mitchell, focusing on the monetary aspects of the business cycle. Recent research has emphasised the responses of models to shocks at the expense its systematic component. Whereas sticky-price models have been successful at replicating impulse response functions from VARs, this paper highlights that they are unable to mimic the data for nominal variables. Moreover, the results are robust to the specification of the Phillips curve, including its backward-looking variant; calibrated values and the inclusion of fiscal policy shocks. Since being able to mimic the data is the lowest hurdle a model must pass, these results pose a challenge for New Keynesian-type models.
Subjects: 
New Keynesian Models
Business Cycles
Correlations
Burns and Mitchell
JEL: 
E32
E52
E58
Document Type: 
Working Paper

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