Journal article
Qualifying the uncertainity about the fit of a new Keynesian pricing model
Journal of monetary economics, Vol.52(6), p1119
01 Sep 2005
Abstract
Recent studies by Gali and Gertler [1999. Inflation dynamics: a structural econometric analysis, Journal of Monetary Economics 44, 195-222] and Sbordone [2002. Prices and unit labor costs: testing models of pricing, Journal of Monetary Economics 49, 265-292] conclude that a theoretical inflation series implied by a forward-looking New Keynesian pricing equation fits post-1960 U.S. inflation closely. Their theoretical inflation series is conditional on (i) a reduced-form forecasting process for real marginal cost; and (ii) the calibration of the pricing equation. The present paper shows that both of these determinants are surrounded by considerable uncertainty. When quantifying the impact of this uncertainty on theoretical inflation, we can no longer say whether the forward-looking pricing equation explains observed inflation dynamics very well or very poorly. [PUBLICATION ABSTRACT]
Metrics
2 Record Views
Details
- Title
- Qualifying the uncertainity about the fit of a new Keynesian pricing model
- Creators
- Andre Kurmann
- Publication Details
- Journal of monetary economics, Vol.52(6), p1119
- Publisher
- Elsevier Sequoia S.A
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Economics (School of Economics)
- Identifiers
- 991020550346004721