Publication
The Korean Economic Review
Staggered Nominal Contracts: Taylor Vs. Calvo
Jang Ryoul Kim / Gie Young LimYear 2007Vol. 23No. 1
Abstract
This paper compares the Taylor type and the Calvo type staggeringschemes in terms of their implications on the behavior of aggregate priceand output following a monetary expansion. In the sticky nominal price case,it is shown that Calvo type staggering implies positive autocorrelations (i.e.,monotone dampening) in price and output, while Taylor type staggeringimplies negative autocorrelations (i.e., oscillatory dampening). In the stickynominal wage case, however, it is found that both types of staggeringgenerate monotonically dampening responses of price and output. In otherwords, the qualitative implications of wage stickiness are robust to thechoice of staggering schemes.