on a perceived law of motion for inflation and observed moments of the inflation time series. The perceived law of motion … allows for both temporary and permanent shocks to inflation, the latter intended to capture the possibility of evolving … shifts in the central bank's inflation target. In this case, the agent's optimal forecast rule defined by the Kalman filter …

curve depend on the level of inflation and the extent of downward nominal wage rigidities. This is true for the both the …

leads to a Phillips curve equation, which makes the inflation rate depend on the expected present-value of future marginal … cost as well as the current periodicals marginal cost and the expected rate of future inflation. …