The price puzzle revisited: can the cost channel explain a rise in inflation after a monetary policy shock?

Henzel, Steffen; Hülsewig, Oliver; Mayer, Eric und Wollmershäuser, Timo (2007): The price puzzle revisited: can the cost channel explain a rise in inflation after a monetary policy shock? CESifo Working Paper,

Abstract

This paper explores whether the cost channel solves the price puzzle. We set-up a New Keynesian DSGE model and estimate it for the euro area by adopting a minimum distance approach. Our findings suggest that - under certain parameter restrictions which are not rejected by the data - the cost channel helps to generate an initial rise of inflation after a monetary contraction.

• Item Type: Paper
• Faculties: Economics; Economics > Chairs > Chair in Public Finance
• Subjects: 300 Social sciences > 330 Economics
• Language: English