Real Wage Rigidities and Disinflation Dynamics: Calvo vs. Rotemberg Pricing

Authors:
  • GAGuido Ascari
    Guido Ascari
  • LRLorenza Rossi
    Lorenza Rossi

  • 1 January 2010
Abstract
Calvo pricing implies output gains, while Rotemberg pricing implies output losses after a disinflation. Introducing real wage rigidities has opposite effects: it generates a long-lasting boom in output in Calvo, and a moderate output slump in Rotemberg.
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