"Price rigidity is the key mechanism for propagating business cycles in traditional Keynesian theory. Yet the New … equilibrium. We show that price rigidity in fact can (by itself) give rise to a strong propagation mechanism of the business cycle …, we show that reasonable price stickiness can generate highly persistent, hump-shaped movements in output, investment and …

"A major criticism of standard specifications of price adjustment in models for monetary policy analysis is that they … dynamic optimizing business cycle model whose price-setting behavior satisfies the natural rate hypothesis. The price …, Eichenbaum, and Evans (2005). Our empirical estimates of the real side of the economy are similar whichever price adjustment …