Evaluating the Calvo model of sticky prices
By: Martin Eichenbaum, Jonas D.M. Fisher.
Contributors: Fisher, Jonas D. M. 1965-; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 10617; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 10617.
Publisher: National Bureau of Economic Research
Published: 2004
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "Can variants of the classic Calvo (1983) model of sticky prices account for the statistical behavior of post-war US inflation? We develop and test versions of the model for which the answer to this question is yes.  We then investigate whether these models imply plausible degrees of inertia in price setting behavior by firms.  We find that they do, but only if we depart from two auxiliary assumptions made in standard expositions of the Calvo model.  These assumptions are that monopolistically competitive firms face a constant elasticity of demand and capital can be instantaneously reallocated after a shock.  When we modify these assumptions our model is consistent with the view that firms re-optimize prices"--National Bureau of Economic Research web site.
Notes: Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 1/11/2005.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.