This paper develops a dynamic stochastic general equilibrium model where firms are imperfectly informed. We estimate the model through likelihood-based methods and find that it can explain the highly persistent real effects of monetary disturbances that are documented by a benchmark VAR. The...

This paper is focused on the evolution of inflation and output dynamics over the last 50 years, the changes in the behavior of the Federal Reserve, and the role of agents' beliefs. I consider a new Keynesian dynamic stochastic general equilibrium model with Markov-switching structural parameters...