Abstract – For a given frequency of price changes, the real e_ects of a monetary shock are smaller if adjusting _rms are disproportionately likely to have last set their prices before the shock. This type of selection for the age of prices provides a complete characterization of the nature of pricing frictions in time-dependent sticky-price models. In particular: 1) The Taylor (1979) model exhibits maximal selection for older prices, whereas the Calvo (1983) model exhibits no selection, so that real e ects are smaller in the former than in the latter; 2) Selection is weaker and real e_ects of monetary shocks are larger if the hazard function of price adjustment is less strongly increasing; 3) Selection is weaker and real e ects are larger if there is sectoral heterogeneity in price stickiness; 4) Selection is weaker and real e_ects are larger if the durations of price spells are more variable.
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janeiro 15, 2010