variability, suggesting a link to sticky nominal prices. We also find that distance can explain failures of LOOP, suggesting the …

rise in core inflation, a larger rise in headline inflation, and a decline in wage inflation. The optimal policy is well … aggressive in stabilizing core inflation. Finally, policies that react to a forecast of headline inflation following a temporary … greater volatility in core inflation and the output gap. …

utility calculations. There is a stabilization problem because there are one-period nominal contracts for wages, or prices, or …

A model that contains no costs to changing prices but in which prices do not respond to nominal shocks is presented. In … models that do not feature superneutrality of money flexible price equilibria will allow certain types of monetary shocks to … equilibrium in which sticky prices are supported without menu costs is then constructed. In equilibrium firms choose to keep …

We consider monetary-policy rules with inflation-rate targets and interest-rate or money-growth instruments using a …-target equilibria (BTE) with inflation always below target and constant, asymptotically approaching or eventually reaching a below …

stabilizing the output gap, price inflation, and wage inflation. The Pareto optimum is attainable only if either wages or prices … unconditional variances of the output gap, price inflation, and wage inflation. Monetary policy cannot replicate the Pareto …-optimal equilibrium that would occur under completely flexible wages and prices; that is, the model exhibits a tradeoff between …