Logo
Munich Personal RePEc Archive

Sticky Price versus Sticky Information Price: Empirical Evidence in the New Keynesian Setting

Drissi, Ramzi and Ghassan, Hassan Belkacem (2018): Sticky Price versus Sticky Information Price: Empirical Evidence in the New Keynesian Setting. Published in: International Journal of Applied Mathematics and Statistics , Vol. 58, No. 2 (7 July 2019): pp. 64-88.

[thumbnail of MPRA_paper_95174.pdf]
Preview
PDF
MPRA_paper_95174.pdf

Download (365kB) | Preview

Abstract

In order to model the inflation dynamics, we investigated various combinations of nominal rigidities. For this purpose, we analyze two adjustment-of-prices hypotheses as in the new Keynesian literature, namely the price stickiness and the sticky information, within a Dynamic Stochastic General Equilibrium (DSGE) model. For each model, we compare the responses of inflation and output to shocks. We found that sticky information modeling correctly reproduces some important stylized facts after monetary shocks, but with hump-shaped responses. The sticky price model, considering that some fixed prices lead to that Phillips curve, does not correctly reproduce the dynamic inflation response to monetary shocks. We show that single indexation does not add persistence to the two specifications, and the choice of rigidity structure appears to be more important than the presence or absence of lagged values of inflation in the dynamics.

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.