Show simple item record

dc.contributor.authorRAVN, Morten O.
dc.contributor.authorSCHMITT-GROHE, Stephanie
dc.contributor.authorURIBE, Martin
dc.contributor.authorUUSKULA, Lenno
dc.date.accessioned2008-12-10T12:07:47Z
dc.date.available2008-12-10T12:07:47Z
dc.date.issued2008
dc.identifier.issn1725-6704
dc.identifier.urihttp://hdl.handle.net/1814/9973
dc.description.abstractThis paper introduces deep habits into a sticky-price sticky-wage economy and asks whether the countercyclical markup movements induced by deep habits is helpful for accounting for the dynamic effects of monetary policy shocks. We find that this is the case: When allowing for deep habits, the model can account very precisely for the persistent impact of monetary policy shocks on aggregate consumption and for the impact on inflation that other models have hard a time explaining. In particular, the model can account both for the price puzzle and for inflation persistence. We also show that the deep habits mechanism and nominal rigidities are complementary: The deep habits model can account for the dynamic effects of monetary policy shock at low to moderate levels of nominal rigidities. We show that the results are stable over time and are not caused by monetary policy changes.en
dc.format.mimetypeapplication/pdf
dc.language.isoenen
dc.publisherEuropean University Institute
dc.relation.ispartofseriesEUI ECOen
dc.relation.ispartofseries2008/40en
dc.rightsinfo:eu-repo/semantics/openAccess
dc.subjectdeep habitsen
dc.subjectmonetary policyen
dc.subjectprice puzzleen
dc.subjectinflation persistenceen
dc.subjectcountercyclicalen
dc.subjectE21en
dc.subjectE31en
dc.subjectE32en
dc.subjectE52en
dc.titleDeep Habits and the Dynamic Effects of Monetary Policy Shocksen
dc.typeWorking Paperen
dc.neeo.contributorRAVN|Morten O.|aut|
dc.neeo.contributorSCHMITT-GROHÉ|Stephanie|aut|
dc.neeo.contributorURIBE|Martin|aut|
dc.neeo.contributorUUSKULA|Lenno|aut|
dc.neeo.contributorUUSKULA|Lenno|aut|
eui.subscribe.skiptrue


Files associated with this item

Icon

This item appears in the following Collection(s)

Show simple item record