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Sacrifice Ratio in a Medium‐Scale New Keynesian Model
Author(s) -
ASCARI GUIDO,
ROPELE TIZIANO
Publication year - 2012
Publication title -
journal of money, credit and banking
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.763
H-Index - 108
eISSN - 1538-4616
pISSN - 0022-2879
DOI - 10.1111/j.1538-4616.2011.00495.x
Subject(s) - economics , indexation , inflation (cosmology) , wage , new keynesian economics , keynesian economics , scale (ratio) , econometrics , monetary policy , sacrifice , aggregate (composite) , monetary economics , physics , labour economics , materials science , archaeology , quantum mechanics , theoretical physics , composite material , history
A medium‐scale macroeconomic model, with a number of nominal and real frictions that have been shown to be important for explaining observed aggregate fluctuations, is capable to quantitatively account for the empirically estimated sacrifice ratio after a disinflationary monetary policy. This finding, however, is sensitive to the degrees of price and wage indexation to past inflation and, to a less extent, to the price and wage Calvo probabilities.