Logo
Munich Personal RePEc Archive

Dynamics of Sticky Information and Sticky Price Models in a New Keynesian DSGE Framework

Arslan, Mesut Murat (2007): Dynamics of Sticky Information and Sticky Price Models in a New Keynesian DSGE Framework.

[img]
Preview
PDF
MPRA_paper_5269.pdf

Download (322kB) | Preview

Abstract

Recent literature on monetary policy analysis extensively uses the sticky price model of price adjustment in a New Keynesian Macroeconomic framework. This price setting model, however, has been criticized for producing implausible results regarding inflation and output dynamics. This paper examines and compares dynamic responses of the sticky price and sticky information models to a cost-push shock in a New Keynesian DSGE framework. It finds that the sticky information model produces more reasonable dynamics through lagged, gradual and hump-shaped responses to a shock as observed in data. However, these responses depend on the persistence of the shock.

Atom RSS 1.0 RSS 2.0

Contact us: mpra@ub.uni-muenchen.de

This repository has been built using EPrints software.

MPRA is a RePEc service hosted by Logo of the University Library LMU Munich.