Paco Calvo, Planta Sapiens: O inteligenci rostlin

Evaluating the Calvo Model of Sticky Prices

This paper studies the empirical performance of a widely used model of nominal rigidities: the Calvo model of sticky goods prices. We describe an extended version of this model with variable elasticity of demand of the differentiated goods and imperfect capital mobility. We find little evidence against standard versions of the model without the extensions, but the estimated frequency of price a...

Evaluating Calvo-Style Sticky Price Models∗

This paper assesses the empirical performance of Calvo-style sticky goods price models. We argue that Calvo-style models in which firms update non-reoptimized prices to lagged inflation are consistent with the aggregate data in a statistical sense. We then investigate whether these models imply plausible degrees of inertia in price setting behavior by firms. We find that these model do, but onl...

Homo Sapiens

Testing the Calvo model of sticky prices

This paper discusses the empirical performance of a widely used model of nominal rigidities: the Calvo model of sticky goods prices. We argue that there is overwhelming evidence against this model. But this evidence is generated under three key maintained assumptions. First, there is no lag between the time firms reoptimize their price plans and the time they implement those plans. Second, ther...

Assessing Indexation-Based Calvo Inflation Models

Bank of Canada working papers are theoretical or empirical works-in-progress on subjects in economics and finance. The views expressed in this paper are those of the authors. No responsibility for them should be attributed to the Bank of Canada. Société et la Culture (Québec), the Fonds de Recherche sur la Nature et les Technologies (Québec). Abstract Using identification-robust methods, the au...