scholarly journals Equity Pricing in New Keynesian Models with Nominal Rigidities and Investment

2018 ◽  
Author(s):  
Rahul Nath
Keyword(s):  
New Keynesian ◽  
Nominal Rigidities ◽  
Equity Pricing ◽  
New Keynesian Models

scholarly journals The Relationship Between Nominal Wage and Price Flexibility: New Evidence

2020 ◽  
Author(s):  
Diego Solórzano ◽  
Huw Dixon
Keyword(s):  
New Keynesian ◽  
Nominal Wage ◽  
Nominal Rigidities ◽  
Labor Costs ◽  
Labor Share ◽  
Price Adjustments ◽  
New Keynesian Models ◽  
Price Flexibility ◽  
New Evidence ◽  
The Relationship

The frequencies at which prices and wages are adjusted, interpreted as price and wage flexibility, are key elements in workhorse models used for policy analysis. Yet, there is little evidence regarding the relationship between these two sources of nominal rigidities. Using two large and highly disaggregated price and wage microdata sets, this paper provides evidence that the industries changing more frequently wages reset prices more often. Once the frequency of wage adjustments is accounted for, the share of labor costs becomes less relevant in explaining the frequency of price changes, calling for a reinterpretation on previous findings that the labor share is a robust determinant of the frequency of price adjustments. The results in this study have implications for New Keynesian models' microfoundations, as their predictions have proven to be sensitive to the nominal rigidities assumptions.

scholarly journals Some Notes on Historical, Theoretical, and Empirical Background of DSGE Models

2014 ◽  
Vol 14 (2) ◽  
pp. 145-164 ◽  
Author(s):  
Martin Slanicay
Keyword(s):  
Monetary Policy ◽  
Empirical Evidence ◽  
Paradigm Shift ◽  
New Keynesian ◽  
Dsge Models ◽  
Nominal Rigidities ◽  
Pros And Cons ◽  
New Keynesian Models ◽  
Rbc Models

Abstract In this paper I present the historical, theoretical and empirical background of DSGE models. I show that the fundament of these models lies in optimizing agents framework and argue which impulses fueled the development of DSGE models. I demonstrate the evolution of DSGE models with an accent on the role and effects of the monetary policy, using distinction between RBC models and New Keynesian models. I explain the paradigm shift from the RBC models to the New Keynesian models by pointing out the main pitfalls of the RBC models and showing how adding nominal rigidities to the otherwise standard RBC models enhances empirical properties of these models. I also discuss how nominal rigidities are modeled in New Keynesian DSGE models and what the pros and cons of different approaches are. Finally, I review the most important New Keynesian theories of nominal rigidities and some of the empirical evidence on price and wage rigidities

scholarly journals Asset Returns, the Business Cycle and the Labor Market

2013 ◽  
Vol 14 (3) ◽  
pp. 372-397 ◽  
Author(s):  
Burkhard Heer ◽  
Alfred Maußner
Keyword(s):  
Labor Market ◽  
Business Cycle ◽  
Equity Premium ◽  
Working Hours ◽  
New Keynesian ◽  
Monetary Shocks ◽  
Productivity Shocks ◽  
New Keynesian Models ◽  
The Business Cycle ◽  
Sticky Wages

Abstract We review the labor market implications of recent real-business cycle and New Keynesian models that successfully replicate the empirical equity premium. We document the fact that all models reviewed in this article that do not feature either sticky wages or immobile labor between two production sectors as in Boldrin et al. (2001) imply a negative correlation of working hours and output that is not observed empirically. Within the class of Neo-Keynesian models, sticky prices alone are demonstrated to be less successful than rigid nominal wages with respect to the modeling of the labor market stylized facts. In addition, monetary shocks in these models are required to be much more volatile than productivity shocks to match statistics from both the asset and labor market.

Effective Monetary Policy Strategies in New Keynesian Models: A Reexamination

2015 ◽  
Vol 29 (1) ◽  
pp. 289-344 ◽  
Author(s):  
Hess Chung ◽  
Edward Herbst ◽  
Michael T. Kiley
Keyword(s):  
Monetary Policy ◽  
New Keynesian ◽  
New Keynesian Models ◽  
Policy Strategies

scholarly journals Inflation in the Great Recession and New Keynesian Models

2014 ◽  
Author(s):  
Marco Del Negro ◽  
Marc Giannoni ◽  
Frank Schorfheide
Keyword(s):  
Great Recession ◽  
New Keynesian ◽  
The Great Recession ◽  
New Keynesian Models

scholarly journals New Keynesian Models: Not Yet Useful for Policy Analysis

2008 ◽  
Author(s):  
V.V. Chari ◽  
Patrick Kehoe ◽  
Ellen McGrattan
Keyword(s):  
Policy Analysis ◽  
New Keynesian ◽  
New Keynesian Models

MPCs, MPEs, and Multipliers: A Trilemma for New Keynesian Models

2021 ◽  
pp. 1-41
Author(s):  
Adrien Auclert ◽  
Bence Bardóczy ◽  
Matthew Rognlie
Keyword(s):  
Labor Supply ◽  
New Keynesian ◽  
Fiscal Multipliers ◽  
New Keynesian Models ◽  
Sticky Wages

Abstract We show that New Keynesian models with frictionless labor supply face a challenge: given standard parameters, they cannot simultaneously match plausible estimates of marginal propensities to consume (MPCs), marginal propensities to earn (MPEs), and fiscal multipliers. A HANK model with sticky wages provides a solution to this trilemma.

scholarly journals REAL RIGIDITIES AND OPTIMAL STABILIZATION AT THE ZERO LOWER BOUND IN NEW KEYNESIAN ECONOMIES

2017 ◽  
Vol 23 (4) ◽  
pp. 1371-1400 ◽  
Author(s):  
Adiya Belgibayeva ◽  
Michal Horvath
Keyword(s):  
Lower Bound ◽  
Interest Rates ◽  
Optimal Policy ◽  
New Keynesian ◽  
Zero Lower Bound ◽  
Wage Setting ◽  
Optimal Stabilization ◽  
Labor Market Segmentation ◽  
Policy Responses ◽  
New Keynesian Models

The paper revisits the literature on real rigidities in New Keynesian models in the context of an economy at the zero lower bound. It identifies strategic interaction among price- and wage-setting agents in the economy as an important determinant of both optimal policy and economic dynamics in deep recessions. In particular, labor market segmentation is shown to have a significant influence on the length of the forward commitment to keep interest rates at zero, the magnitude of the fiscal policy responses as well as inflation volatility in the economy under optimal policy.

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