for the unemployment-inflation tradeoff and for the conduct of monetary policy.<br><br>We proceed in two steps. We first … setting by firms. We derive the relation between inflation and unemployment and discuss how it is influenced by the presence … of labor market frictions and real wage rigidities. We show the nature of the tradeoff between inflation and unemployment …

Galí and Gertler (1999) developed a hybrid variant of the New Keynesian Phillips curve that relates inflation to real … marginal cost, expected future inflation and lagged inflation. GMM estimates of the model suggest that forward looking behavior … is dominant: The coefficient on expected future inflation substantially exceeds the coefficient on lagged inflation …

as a tool to compare the characteristics of European inflation dynamics with those observed in the U.S. We also analyze … the factors underlying inflation inertia by examining the cyclical behavior of marginal costs, as well as that of its two … is substantial, but in line with survey evidence and U.S. estimates, (c) inflation dynamics in the Euro area appear to …

We develop and estimate a structural model of inflation that allows for a fraction of firms that use a backward looking … measures of arginal cost as the relevant determinant of inflation, as the theory suggests, instead of an ad-hoc output gap …. Real marginal costs are a significant and quantitatively important determinant of inflation. Backward looking price setting …

and its implications for U.S. output, hours and inflation. Second, we evaluate the extent to which those responses can be … the Fed's policy tended to over stabilize output at the cost of generating excessive inflation volatility. Our evidence …

inflation and unemployment. Under some assumptions, that relation takes a form similar to that found in empirical applications … structural wage equation derived here is shown to account reasonably well for the comovement of wage inflation and the …