Dynamics of sticky information and sticky price models in a New Keynesian DSGE framework

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2008-11-01

Author

Arslan, M. Murat

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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.

Subject Keywords

Economics and Econometrics

URI

https://hdl.handle.net/11511/63449

Journal

ECONOMIC MODELLING

DOI

https://doi.org/10.1016/j.econmod.2008.04.006

Collections

Economics and Administrative Sciences, Article

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Citation Formats

M. M. Arslan, “Dynamics of sticky information and sticky price models in a New Keynesian DSGE framework,” ECONOMIC MODELLING, pp. 1276–1294, 2008, Accessed: 00, 2020. [Online]. Available: https://hdl.handle.net/11511/63449.