Calvo vs. Rotemberg in a Trend Inflation World - Wiwi Uni-Frankfurt

6
4
2
χ
0
0 0.2 0.4 0.6 0.8 1
10
5
0
0 0.2 0.4 0.6 0.8 1
α
i
10
5
φ y
0
0 0.2 0.4 0.6 0.8 1
10
2000
1000
ρ g
0
0.7 0.75 0.8 0.85 0.9 0.95 1
σ g
1 1.5 2 2.5 3 3.5 4
x 10 ­3
0
8
6
4
2
0
1.5
1
0.5
0
20
θ
0.2 0.4 0.6 0.8
α π
1 2 3 4
ρ
a
0
0.7 0.75 0.8 0.85 0.9 0.95 1
400
200
σ a
2 4 6 8 10 12 14
x 10 ­3
0
2
1
σ
0
1 1.5 2 2.5 3 3.5
10
5
α y
0
0 0.1 0.2
ρ
m
0.3 0.4
5
1000
0
0 0.2 0.4 0.6 0.8
σ m
2 4 6 8 10 12 14
x 10 ­3
0
Prior
Post., baseline
Post., Calvo
Post., Rotemberg
Figure 1: Prior and posterior densities. ’Baseline’model: Full indexation. ’Calvo’
and ’Rotemberg’: See description in the text. Models estimated under a 2.5 per cent
trend in‡ation net rate (yearly rate, percentualized) and indexation to past in‡ation.
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