Article thumbnail
Location of Repository

Strategic Interaction among Heterogeneous Price-Setters in an Estimated DSGE Model

By Olivier Coibion and Yuriy Gorodnichenko


We consider a dynamic stochastic general equilibrium model (DSGE) in which firms follow one of four price‐setting regimes: sticky prices, sticky information, rule of thumb, or full‐information flexible prices. The parameters of the model, including the fraction of each type of firm, are estimated by matching the moments of the observed variables of the model to those found in the data. We find that sticky price firms and sticky information firms jointly account for over 80% of firms in the model. We compare the performance of our hybrid model to pure sticky price and sticky information models along various dimensions, including monetary policy implications. © 2011 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

DOI identifier: 10.1162/REST_a_00102
OAI identifier:
Download PDF:
Sorry, we are unable to provide the full text but you may find it at the following location(s):
  • http://www.mitpressjournals.or... (external link)
  • Suggested articles

    To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.