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| dc.title | Rule-of-Thumb Consumers, Nominal Rigidities and the Design of Interest Rate Rules |
| dc.contributor.author | Ocampo Díaz, Sergio |
| dc.contributor.orgunit | Department of Research and Chief Economist |
| dc.date.available | 2013-09-19T00:00:00 |
| dc.date.issue | 2013-05-20T00:00:00 |
| dc.description.abstract | 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. |
| dc.format.extent | 28 |
| dc.identifier.doi | http://dx.doi.org/10.18235/0011500 |
| dc.identifier.url | https://publications.iadb.org/publications/english/document/Rule-of-Thumb-Consumers-Nominal-Rigidities-and-the-Design-of-Interest-Rate-Rules.pdf |
| dc.language.iso | en |
| dc.medium | Adobe PDF |
| dc.publisher | Inter-American Development Bank |
| dc.subject | Monetary Policy |
| dc.subject.jelcode | C68 - Computable General Equilibrium Models |
| dc.subject.jelcode | E32 - Business Fluctuations • Cycles |
| dc.subject.jelcode | E37 - Forecasting and Simulation: Models and Applications |
| dc.subject.keywords | IDB-WP-400 |
| dc.type | Working Papers |
| idb.identifier.pubnumber | Working Papers |
| idb.operation | BK-A1467 |