The perils of first-order conditions of New Keynesian models

Kim, Minseong (2016): The perils of first-order conditions of New Keynesian models.

Abstract

This paper presents a case where first-order conditions used for the Calvo sticky-price New Keynesian model is insufficient and in fact results in calculation of a wrong equilibrium.

• Item Type: MPRA Paper
• Language: English
• Keywords: New Keynesian, sticky price, monopolistic competition, consistency, first-order conditions
• Subjects: B - History of Economic Thought, Methodology, and Heterodox Approaches > B4 - Economic Methodology > B41 - Economic Methodology; C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C61 - Optimization Techniques ; Programming Models ; Dynamic Analysis; C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C62 - Existence and Stability Conditions of Equilibrium; E - Macroeconomics and Monetary Economics > E1 - General Aggregative Models > E13 - Neoclassical; 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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Kim, M. (2016). "How accounting accuracy affects DSGE models", Preprint.

Moll, B. (2012). "New Keynesian Model in Continuous Time", Slides.

Rotemberg, J. (1982). "Sticky Prices in the United States", Journal of Political Economy 90 (6): 1187-1211.