Transmission of monetary policy

• Real and Nominal Frictions within the Firm: How Lumpy Investment Matters for Price Adjustment

  Staff Working Paper 2009-36 Michael K. Johnston

  Real rigidities are an important feature of modern sticky price models and are policy-relevant because of their welfare consequences, but cannot be structurally identified from time series. I evaluate the plausibility of capital specificity as a source of real rigidities using a two-dimensional generalized (s,S) model calibrated to micro evidence.

  Content Type(s): Staff Research, Staff Working Papers Topic(s): Transmission of monetary policy JEL Code(s): E, E1, E12, E2, E22, E3, E31

• How Changes in Oil Prices Affect the Macroeconomy

  Staff Working Paper 2009-33 Brian DePratto, Carlos De Resende, Philipp Maier

  We estimate a New Keynesian general-equilibrium open economy model to examine how changes in oil prices affect the macroeconomy. Our model allows oil price changes to be transmitted through temporary demand and supply channels (affecting the output gap), as well as through persistent supply side effects (affecting trend growth).

  Content Type(s): Staff Research, Staff Working Papers Topic(s): Economic models, Interest rates, Potential output, Productivity, Transmission of monetary policy JEL Code(s): F, F4, F41, Q, Q4, Q43