During the Great Recession, despite the large fall in output, inflation did not fall much. This is known as the missing … inflation during the Great Recession. We show that inflation did not fall much because intermediate goods prices were increasing …

, prompting them to raise markups and prices in anticipation of potentially higher future inflation. These findings establish a … connection between heightened uncertainty, higher core inflation, and increased profits. …

conclusions that arise from the model. In the new model, the level and the variability of inflation is higher than in the Calvo … model with no selection effect. Attempting to lower inflation's variability results in a significant increase output …'s variability, without changing inflation's variability much. …