Kilponen, Juha; Vilmunen, Jouko; Vähämaa, Oskari - Suomen Pankki - 2013
Cancellation of income and substitution effect implied by King-Plosser-Rebelo (1988) preferences breaks tight coefficient restriction between the slope of the Phillips curve and the elasticity of consumption with respect to real interest rate in a sticky price macro model. This facilitates the...