Q1. What are the contributions in this paper?
In this paper, the unconditional expectation of average household utility is expressed in terms of the unconditional variances of the output gap, price inflation, and wage inflation.
Optimal monetary policy with staggered wage and price contracts
TLDR
In this paper, the unconditional expectation of average household utility is expressed in terms of the unconditional variances of the output gap, price inflation, and wage inflation, where the model exhibits a tradeoff in stabilizing output gap and price inflation.About:
This article is published in Journal of Monetary Economics.The article was published on 2000-10-01 and is currently open access. It has received 1813 citations till now. The article focuses on the topics: Inflation & Inflation targeting.read more
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Nominal Rigidities and the Dynamic Effects of a Shock to Monetary Policy
TL;DR: In this article, the authors present a model embodying moderate amounts of nominal rigidities that accounts for the observed inertia in inflation and persistence in output, and the key features of their model are those that prevent a sharp rise in marginal costs after an expansionary shock to monetary policy.
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Shocks and frictions in US business cycles: A Bayesian DSGE approach
Frank Smets,Rafael Wouters +1 more
TL;DR: In this paper, a dynamic stochastic general equilibrium (DSGE) model for the US economy is proposed, which incorporates many types of real and nominal frictions: sticky nominal price and wage setting, habit formation in consumption, investment adjustment costs, variable capital utilisation and fixed costs in production.
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An estimated dynamic stochastic general equilibrium model of the euro area
Frank Smets,Raf Wouters +1 more
TL;DR: In this paper, a dynamic stochastic general equilibrium (DSGE) model with sticky prices and wages for the euro area was developed and estimated with Bayesian techniques using seven key macroeconomic variables: GDP, consumption, investment, prices, real wages, employment, and the nominal interest rate.
Book
Monetary Theory and Policy
TL;DR: In this article, empirical evidence on money and output is presented, including the Tobin effect and the MIU approximation problems, and a general equilibrium framework for monetary analysis is presented.
References
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Staggered prices in a utility-maximizing framework
TL;DR: In this article, the authors developed a model of staggered prices along the lines of Phelps (1978) and Taylor (1979, 1980), but utilizing an analytically more tractable price-setting technology.
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Discretion versus policy rules in practice
TL;DR: In this article, the authors examine how recent econometric policy evaluation research on monetary policy rules can be applied in a practical policymaking environment, and the discussion centers around a hypothetical but representative policy rule much like that advocated in recent research.
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Monopolistic competition and optimum product diversity
Avinash Dixit,Joseph E. Stiglitz +1 more
TL;DR: In this article, Pettengill tests whether there is an excessive number of firms in a monopolistically competitive equilibrium by a device of considerable expository merit, and redistributes the resources thus released equally over the remaining firms in the sector, to see if welfare can be improved.
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The solution of linear difference models under rational expectations
TL;DR: In this article, an explicit solution for an important subclass of the model Shiller refers to as the general linear difference model is given, together with the conditions for existence and uniqueness.
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Aggregate Dynamics and Staggered Contracts
TL;DR: In this article, the authors show that staggered wage contracts as short as 1 year are capable of generating the type of unemployment persistence which has been observed during postwar business cycles in the United States.