The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Monetary Business Cycle Models (Sticky Prices and Wages)

  • Christopher J. Erceg
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_2852

Abstract

Monetary business cycle (MBC) models are general equilibrium models designed to analyse how monetary shocks affect output, prices, and interest rates. This article describes the analytic framework underlying sticky prices and wages in modern MBC models, and highlights the prominent role that these rigidities play in the transmission of nominal and real shocks.

Keywords

Cost-push inflation Friedman, M Inflation Inflationary expectations Intertemporal optimization Keynes, J. M Lucas, R Microfoundations Monetary business cycle models Monetary policy rules Monetary shocks Monetary transmission mechanism New Keynesian Phillips curve Nominal rigidities Nominal shocks Nominal wage inflation Output gap Phelps, E Phillips curve Price dynamics Rational expectations Real business cycles Real rigidities Real shocks Staggered contracts model Sticky prices Sticky wages Technology shocks Unemployment 

JEL Classification

D4 D10 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Christopher J. Erceg
    • 1
  1. 1.