I dunno, but I’m reading Christiano, Eichenbaum, and Rebelo and they seem pretty confident they know. They say, “[w]e only consider values of κ for which the zero bound is binding, so we display results for 0.013 ≤ κ ≤ 0.038.” Kappa is the degree of price stickiness and assuming I’ve done my sums right, their analysis depends on the assumption that firms update prices on average once every 5.88 to 6.90 periods. That seems like a very precise calibration range for a variable we’re not very certain about…

What do Christiano, Eichenbaum, and Rebelo mean when they say, “[w]e only consider values of κ for which the zero bound is binding, so we display results for 0.013 ≤ κ ≤ 0.038.”?

I didn’t my sums right, but this range is still short… 5.5 to 8.3 periods.