the assessment of the welfare costs of nominal rigidities and the performance of alternative monetary policy rules in an … scheme matters quantitatively for the welfare costs of nominal rigidities. However, qualitative statements such as the … welfare ranking of alternative monetary policy rules are robust to changes in contracting schemes. The difference between …

obtain when intertemporal substitution is low, and that output volatility rankings do not induce similar welfare rankings …

only Calvo-type wage rigidity fails to achieve. We also show that modelling wage rigidity heterogeneity - as oppose to … standard-Calvo-wages - amplifies the macroeconomic output fluctuations resulting from a technology shock whereas it mitigates …

expansionary. Thereby, a passive monetary policy rule ensures equilibrium determinacy and maximizes welfare, suggesting that …

which an optimal timeless policy is substituted for a Taylor rule. We find the model explains the data both for the Great … output volatility and smaller demand shocks for lower interest rate volatility. The same model with differing Taylor rules of … generated data in which Taylor rule regressions could have been found, creating an illusion that monetary policy was following …

magnitude smaller than in the Calvo model that generates the same real effects. Consumption responds slowly to aggregate shocks …