Comparing New Keynesian Models in the Euro Area : A Bayesian Approach

@inproceedings{Rabanal2003ComparingNK,
  title={Comparing New Keynesian Models in the Euro Area : A Bayesian Approach},
  author={Pau Rabanal and Juan F. Rubio-Ramirez},
  year={2003}
}
This paper estimates and compares four versions of the sticky price New Keynesian model for the Euro area, using a Bayesian approach as described in Rabanal and Rubio-Ramírez (2003). We find that the average duration of price contracts is between four and eight quarters, similar to the one estimated in the United States, while price indexation is found to be smaller. On the other hand, average duration of wage contracts is estimated to between one and two quarters, lower than the one found for… CONTINUE READING