The role of relative prices in a generalized new keynesian Phillips curve
Recent literature attributes a very large fraction of the inflation volatility to "cost-push shocks." This paper develops and estimates a microfounded DSGE model that features a first-order role for relative-price dynamics. A measure of relative price disalignments appears in the new Keyne...
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| Format: | article |
| Status: | Published version |
| Publication Date: | 2008 |
| Country: | México |
| Institution: | Centro de Investigación y Docencia Económicas, A.C. |
| Repository: | Redalyc-CIDE |
| OAI Identifier: | oai:redalyc.org:125012546002 |
| Online Access: | https://www.redalyc.org/articulo.oa?id=125012546002 |
| Access Level: | Open access |
| Keyword: | Economía y Finanzas Relative prices inflation dynamics output fluctuations |
| Summary: | Recent literature attributes a very large fraction of the inflation volatility to "cost-push shocks." This paper develops and estimates a microfounded DSGE model that features a first-order role for relative-price dynamics. A measure of relative price disalignments appears in the new Keynesian Phillips curve (NKPC) of the model, resembling a cost-push shock. Impulse response analysis suggests that an alternative interpretation to the effects of exogenous cost-push shocks in the NKPC relies on the endogenous response of relative prices to exogenous shocks that perturb them. |
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