Sacrifice ratio in a medium-scale New Keynesian model

A medium-scale macroeconomic model, with a number of nominal and real frictions that have be 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.