2012/02/07 by Huw David Dixon, Hervé Le Bihan · 1 citation
Economics, Econometrics and Finance · #Monetary Policy and Economic Impact #Economic theories and models #Economic Theory and Policy
paper · doi:10.1111/j.1468-0297.2012.02497.x
openalex publication_date 2012/02/07 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
The Generalised Calvo and the Generalised Taylor models of price and wage setting are, unlike the standard Calvo and Taylor counterparts, exactly consistent with the distribution of durations observed in the data. Using price and wage micro-data from a major euro area economy (France), we develop calibrated versions of these models. We assess the consequences for monetary policy transmission by embedding these calibrated models in a standard dynamic stochastic general equilibrium model. The Generalised Taylor model is found to help rationalise the hump-shaped and persistent response of inflation, without resorting to the counterfactual assumption of systematic wage and price indexation. © 2012 The Author(s). The Economic Journal © 2012 Royal Economic Society.