The Perils of First-Order Conditions of New Keynesian Models
3 Pages Posted: 16 Apr 2016 Last revised: 11 Apr 2021
Date Written: May 11, 2016
This paper presents a case where first-order conditions used for the Calvo sticky-price New Keynesian model is insufficient and in fact results in calculation of a wrong equilibrium.
Keywords: monopolistic competition, consistency, sticky price, new keynesian, first-order conditions
JEL Classification: B41, C61, C62, E13, E52
Suggested Citation: Suggested Citation