TY  - JOUR
AU  - Ireland,Peter N.
TI  - Sticky-Price Models of the Business Cycle: Specification and Stability
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7511
PY  - 2000
Y2  - January 2000
UR  - http://www.nber.org/papers/w7511
L1  - http://www.nber.org/papers/w7511.pdf
N1  - Author contact info:
Peter N. Ireland
Boston College
Department of Economics
140 Commonwealth Ave.
Chestnut Hill, MA 02467-3859
Tel: 617/552-3687
Fax: 617/552-2308
E-Mail: irelandp@bc.edu
AB  - This paper focuses on the specification and stability of a dynamic, stochastic, general equilibrium model of the American business cycle with sticky prices.  Maximum likelihood estimates reveal that the data prefer a version of the model in which adjustment costs apply to the price level but not to the inflation rate.  Formal hypothesis test detect instability in the estimated parameters, particularly in estimates of the representative household's discount factor.  Evidently, more detailed descriptions of the economy are needed to explain movements in interest rates before and after 1979.
ER  -