The New Keynesian Phillips Curve: the Role of Hiring and Investment Costs

Stephen Millard, Eran Yashiv () and Renato Faccini
Additional contact information
Renato Faccini: Queen Mary, University of London

No 556, 2012 Meeting Papers from Society for Economic Dynamics

Abstract: We embed convex hiring and investment costs and their interaction in a New Keynesian DSGE model with Nash wage bargaining. We explore the implications with respect to inflation dynamics in the New Keynesian Phillips curve. We use two structural estimation methods (GMM and Bayesian estimation) and two aggregate data sets (the U.S. and the U.K. economies). Our results indicate that : (i) one-step ahead inflation rate predictions are much closer to the data in the model with hiring and investment costs than in the standard New-Keynesian model without these costs. (ii) The model provides new estimates for hiring and investment frictions, price adjustment costs, wage bargaining power and the disutility of labor.

Date: 2012
New Economics Papers: this item is included in nep-dge and nep-mac
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://red-files-public.s3.amazonaws.com/meetpapers/2012/paper_556.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:red:sed012:556

Access Statistics for this paper

More papers in 2012 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().