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December 2012 issue
List of authors
 
Roman Horvth, Kateřina mdkov and Jan Zpal
Jens H.E. Christensen, Jose A. Lopez, and Glenn D. Rudebusch
Philip Liu and Konstantinos Theodoridis
Gneş Kamber and Stephen Millard
Yassine Bouhdaoui and David Bounie
Blaise Gadanecz, Kostas Tsatsaronis, and Yener Altunbaş
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Using Estimated Models to Assess Nominal and Real Rigidities in the United Kingdom

by Gneş Kambera and Stephen Millardb

Abstract

This paper aims to contribute to our understanding of inflation dynamics in the United Kingdom by estimating two dynamic stochastic general equilibrium models and assessing the role of nominal and real rigidities within them. We first obtain an empirical representation of the monetary transmission mechanism in the United Kingdom and then estimate the models by minimizing the difference between this representation and its model equivalents. We find that both models can explain the data reasonably well without relying on undue amounts of price and wage stickiness.

JEL Codes: E31, E52.

 
Full article (PDF, 23 pages 397 kb)


a Reserve Bank of New Zealand
b Bank of England and Durham Business School