Blanchard, Olivier J.; Galí, Jordi - 2021
desired output. However, the standard new Keynesian framework implies no such trade-off. In that framework, stabilizing … inflation is equivalent to stabilizing the welfare-relevant output gap. In this paper, we argue that this property of the new … Keynesian framework, which we call the "divine coincidence", is due to a special feature of the model: the absence of non …