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Nominal Rigidities and the Dynamic Effects of a Shock to Monetary Policy

Year: 2005

Type: article

Abstract: We present a model embodying moderate amounts of nominal rigidities which accounts for the observed inertia in inflation and persistence in output. The key features of our model are those that prevent a sharp rise in marginal costs after an expansionary shock to monetary policy. Of these features, the most important are staggered wage contracts of average duration three quarters, and variable capital utilization.

Source: Journal of Political Economy

DOI: 10.1086/426038

Authors: Lawrence J. Christiano, Martin Eichenbaum, Charles L. Evans

Institutions: Northwestern University, National Bureau of Economic Research, Federal Reserve Bank of Chicago

Language: English

Topic: Monetary Policy and Economic Impact

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: green

OpenAlex ID: W3121293400

FWCI: 531.3

Cites: 75

Cited by: 6,239

Related to: 10