Contract length heterogeneity and the persistence of monetary shocks in a dynamic generalized Taylor economy

Dixon, Huw David ORCID: https://orcid.org/0000-0002-9875-8965 and Kara, Engin 2011. Contract length heterogeneity and the persistence of monetary shocks in a dynamic generalized Taylor economy. European Economic Review 55 (2) , pp. 280-292. 10.1016/j.euroecorev.2010.05.003

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Abstract

We develop the generalized Taylor economy (GTE) in which there are many sectors with overlapping contracts of different lengths. In economies with the same average contract length, monetary shocks will be more persistent when longer contracts are present. Using the Bils–Klenow distribution of contract lengths, we find that the corresponding GTE tracks the U.S. data well. When we choose a GTE with the same distribution of completed contract lengths as the Calvo, the economies behave in a similar manner.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Subjects:	H Social Sciences > H Social Sciences (General) H Social Sciences > HB Economic Theory H Social Sciences > HG Finance
Uncontrolled Keywords:	Persistence; Taylor contract; Calvo
Publisher:	Elsevier
ISSN:	0014-2921
Last Modified:	19 Oct 2022 09:53
URI:	https://orca.cardiff.ac.uk/id/eprint/22547

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