Generalised Taylor and Generalised Calvo price and wage setting: micro-evidence with macro implications

Dixon, Huw David ORCID: https://orcid.org/0000-0002-9875-8965 and Le Bihan, Herve 2012. Generalised Taylor and Generalised Calvo price and wage setting: micro-evidence with macro implications. Economic Journal 122 (560) , pp. 532-554. 10.1111/j.1468-0297.2012.02497.x

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Abstract

The Generalised Calvo and the Generalised Taylor models of price and wage setting are, unlike the standard Calvo and Taylor counterparts, exactly consistent with the distribution of durations observed in the data. Using price and wage micro-data from a major euro area economy (France), we develop calibrated versions of these models. We assess the consequences for monetary policy transmission by embedding these calibrated models in a standard dynamic stochastic general equilibrium model. The Generalised Taylor model is found to help rationalise the hump-shaped and persistent response of inflation, without resorting to the counterfactual assumption of systematic wage and price indexation.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Subjects:	H Social Sciences > HG Finance
Publisher:	Wiley-Blackwell
ISSN:	0013-0133
Last Modified:	20 Oct 2022 09:40
URI:	https://orca.cardiff.ac.uk/id/eprint/32741

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