Are Prices Sticky? A Study On Lithuanian Macro Data
In this essay, the degree of price rigidity was evaluated on Lithuanian macro data. For this purpose, a Calvo-type sticky price optimizing agent model was employed as theoretical background, guiding to the New Keynesian Phillips Curve (NKPC). The results of econometric analysis revealed, that real marginal costs do drive short-run inflation in Lithuania if unit labor costs are employed as a proxy.