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New perspectives on capital, sticky prices, and the Taylor principle [An article from: Journal of Economic Theory]
Book Details
Author(s)T. Sveen, L. Weinke
PublisherElsevier
ISBN / ASINB000RR89FO
ISBN-13978B000RR89F9
MarketplaceFrance 🇫🇷
Description
This digital document is a journal article from Journal of Economic Theory, published by Elsevier in . The article is delivered in HTML format and is available in your Amazon.com Media Library immediately after purchase. You can view it with any web browser.
Description:
Our main result is that dynamic new-Keynesian (DNK) models with firm-specific capital feature a substantial amount of endogenous price stickiness. We use this insight to assess the desirability of alternative interest rate rules, and make the case for combining active monetary policy with interest rate smoothing and/or some responsiveness of the nominal interest rate to real economic activity. The key mechanism behind our results is also useful from a positive point of view: the feature of firm-specific capital increases the empirical appealingness of DNK models, as documented by a growing body of literature.
Description:
Our main result is that dynamic new-Keynesian (DNK) models with firm-specific capital feature a substantial amount of endogenous price stickiness. We use this insight to assess the desirability of alternative interest rate rules, and make the case for combining active monetary policy with interest rate smoothing and/or some responsiveness of the nominal interest rate to real economic activity. The key mechanism behind our results is also useful from a positive point of view: the feature of firm-specific capital increases the empirical appealingness of DNK models, as documented by a growing body of literature.
