Given the frequency of price changes, the real effects of a monetary shock are smaller if adjusting firms are … disproportionately likely to be ones with prices set before the shock. This selection effect is important in a large class of sticky …

. The steady-state inflation rate is above 8 percent for a baseline calibration, but it varies substantially with … alternative structural parameter values. If the initial condition involves inflation higher than steady state, discretionary … policy generates an immediate drop in inflation followed by a gradual increase to the steady state. Unlike the two …

single long-run restriction to identify a permanent output shock as in Blanchard and Quah (1989), with three sign … line with the predictions of theory it is robustly negative during the interwar era; and (iii) during the interwar era, the …

marginal value of future demand as additional driving forces for inflation dynamics. We construct the driving process in the …