In a stylized DSGE model with an energy sector, the optimal policy response to an adverse energy supply shock implies a …-approximated by policies that stabilize the output gap, but also by a wide array of "dual mandate" policies that are not overly … energy shock imply markedly different effects than policies that react to a forecast of core, with the former inducing …

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 … equilibrium in which sticky prices are supported without menu costs is then constructed. In equilibrium firms choose to keep … prices fixed in response to nominal shocks because doing so provides a service to their customers, increasing profits by …

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 …

aggregate price level and to demonstrate econometrically its equivalence to the exogeneity of relative prices with respect to … role for supply-side disturbances in explaining comovements in aggregate and relative prices. …