Nominal Rigidity

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August 31, 2024 3 min read Definitions
Calvo Contract: An Explanation of Nominal Rigidity
Economics Finance Nominal Rigidity Price-Setting New Keynesian Economics Guillermo Calvo Economic Models
A comprehensive guide to understanding Calvo Contracts, their role in New Keynesian economics, the underlying model, key concepts, historical context, and applications.
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August 31, 2024 5 min read Definitions
Taylor Contract: Model of Nominal Rigidity
Economics Finance Macroeconomics Taylor Contract Nominal Rigidity New Keynesian Economics Staggered Prices Price-Setting
The Taylor contract is a model of nominal rigidity, or staggered prices, in New Keynesian economics where nominal prices are set by firms for a finite number of periods. Originally formulated by John Taylor for wage-setting by labor unions, it was later generalized to price-setting by firms.
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