Abstract
A medium‐scale macroeconomic model, with a number of nominal and real frictions that have been shown to be important for explaining observed aggregate fluctuations, is capable to quantitatively account for the empirically estimated sacrifice ratio after a disinflationary monetary policy. This finding, however, is sensitive to the degrees of price and wage indexation to past inflation and, to a less extent, to the price and wage Calvo probabilities.
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