Guerrieri, Luca; Gust, Christopher; López-Salido, J. David - In: American Economic Journal: Macroeconomics 2 (2010) 4, pp. 247-80
We develop and estimate an open economy New Keynesian Phillips Curve (NKPC) in which variable demand elasticities give rise to movements in desired markups in response to changes in competitive pressure from abroad. A parametric restriction yields the standard NKPC under constant elasticity and...