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.
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11571/210463
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