This note shows that full price indexation is not optimal in the long-run, in the New Keynesian model under trend inflation and price staggering à la Calvo. Moreover, we show that more price stickiness may increase steady state welfare, if price indexation is partial.
The Long-run Optimal Degree of Indexation in New Keynesian models with price staggering a la' Calvo
ASCARI, GUIDO;BRANZOLI, NICOLA
2010-01-01
Abstract
This note shows that full price indexation is not optimal in the long-run, in the New Keynesian model under trend inflation and price staggering à la Calvo. Moreover, we show that more price stickiness may increase steady state welfare, if price indexation is partial.File in questo prodotto:
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