Arbeitspapier
Rule-of-Thumb Consumers, Nominal Rigidities and the Design of Interest Rate Rules
This paper argues that, in the presence of nominal wage rigidities, the existence of Rule-of-Thumb agents and price rigidities does not cause a change in the Taylor Principle as suggested by Galí et al. (2004), and that the only rigidity relevant for this result is that faced by Rule-of-Thumb consumers. For doing so, a New-Keynesian model with Rule-of-Thumb agents is proposed. The model discriminates between both type of agents when defining wage rigidities, thus al- lowing to identify and measure the factors that affect the Taylor Principle, this also allows to drop complete markets for Rule-of-Thumb agents, and the simple use of non-separable utility functions in order to determine the incidence of the wealth effect when facing staggered wages.
- Language
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Englisch
- Bibliographic citation
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Series: IDB Working Paper Series ; No. IDB-WP-400
- Classification
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Wirtschaft
Computable General Equilibrium Models
Business Fluctuations; Cycles
Prices, Business Fluctuations, and Cycles: Forecasting and Simulation: Models and Applications
- Event
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Geistige Schöpfung
- (who)
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Diaz, Sergio Ocampo
- Event
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Veröffentlichung
- (who)
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Inter-American Development Bank (IDB)
- (where)
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Washington, DC
- (when)
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2013
- Handle
- Last update
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10.03.2025, 11:45 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Diaz, Sergio Ocampo
- Inter-American Development Bank (IDB)
Time of origin
- 2013
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