In recent years, it has become increasingly common to estimate New Keynesian Phillips curves with a measure of firms' real marginal cost as the real driving variable. It has been argued that this measure is both theoretically and empirically superior to the traditional output gap. In this paper,...

We use a standard new Keynesian model to evaluate the cost of disinflation - measured by the sacrifice ratio, the central bank's loss function, and the welfare cost - in a small open economy vis-à-vis a closed economy. Disinflation is either more costly or less beneficial in the small open...