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

Abstract

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

Kim, Bryce, The Perils of First-Order Conditions of New Keynesian Models (May 11, 2016). Available at SSRN: https://ssrn.com/abstract=2765202 or http://dx.doi.org/10.2139/ssrn.2765202

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