Robust policy choice under Calvo and Rotemberg pricing

Sienknecht, Sebastian (2012): Robust policy choice under Calvo and Rotemberg pricing.

Abstract

This paper examines the robustness of welfare-based policy choices across the nonlinear Calvo and Rotemberg pricing assumptions. Comparisons between simple interest rate rules turn out to be robust and independent of the price dispersion inherent in the Calvo setting. This robustness is violated if there is a policy alternative that controls for price dispersion.

• Item Type: MPRA Paper
• Language: English
• Keywords: Calvo pricing; Rotemberg pricing; welfare analysis; robustness analysis
• Subjects: E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E30 - General; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy

References

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