TY - GEN digital ID - 131495615 TI - Inflation, Output, and Markup Dynamics with Forward-Looking Wage and Price Setters AU - Phaneuf, Louis AU - Sims, Eric R. AU - Victor, Jean Gardy PY - 2015 PB - Cambridge, Mass. National Bureau of Economic Research DB - UniCat KW - Zonder onderwerpscode: economie UR - https://www.unicat.be/uniCat?func=search&query=sysid:131495615 AB - We formulate a medium-scale DSGE model that emphasizes a strong interplay between a roundabout production structure and a working capital channel that requires firms to borrow funds to finance the costs of all their variable inputs and not just the wage bill. Despite an absence of backward-looking price and wage indexation, our model is able to account for (i) a persistent and hump-shaped response of inflation to a monetary policy shock, (ii) a large and persistent response of output to a monetary policy shock, (iii) a mild "price puzzle," (iv) a procyclical price markup conditional on a monetary shock, (v) non-inertial responses of inflation to non-monetary shocks, and (vi) a negative unconditional autocorrelation of the first difference of inflation that is consistent with the data. A medium-scale model relying on backward indexation of wages and prices to past inflation fails along several of these dimensions. ER -