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Robust policy choice under Calvo and Rotemberg pricing

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

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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.

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