The Macroeconomic Effects of Nonzero Trend Inflation
Bank of Canada; Université du Québec à Montréal; Bank of Canada
Standard New Keynesian DSGE model with monopolistically competitive intermediate goods firms, three alternative time-dependent pricing schemes (Calvo, truncated-Calvo, Taylor), capital accumulation with adjustment costs, money-in-utility, and T
intermediate goods firms: monopolistic competition with time-dependent pricing (Calvo, truncated-Calvo, or Taylor); final good firm: perfect competition with CES aggregator
Table 2 p.1680
Calvo pricing with 4% trend inflation (deterministic steady state)