We explore the role of the cost channel in accounting for inflation persistence in the New Keynesian model with Calvo pricing. Hump-shaped responses of inflation to monetary shocks are obtained under purely nominal rigidities.

In this paper, we consider a model where producers set their prices based on their prediction of the aggregated price level and an exogenous variable, which can be a demand or a cost-push shock. To form their expectations, they use OLS-type econometric learning with bounded memory. We show that...

If long-term inflation expectations are well-anchored, they should be unaffected by short-term economic news. This letter introduces news-regressions with multiple endogenous breaks to investigate the de- and re-anchoring of US inflation expectations. We confirm earlier evidence on the...

Since the mid-1980s, Phillips curve forecasts of US inflation have been inferior to those of a conventional causal autoregression. However, little change in forecast accuracy is detected against the benchmark of a noncausal autoregression, more accurately characterizing US inflation dynamics.

Using the same data as Chow and Wang (2010) [Chow, Gregory C., Wang, Peng, 2010. The empirics of inflation in China. Economics Letters 109, 28–30], as well as a smooth transition regression model, this paper reconsiders the empirics of inflation in China. The estimated smooth transition error...

We investigate the size of the multiplier at the ZLB in a New Keynesian model. It ranges from around −0.25 to +1.5, depending on the extent to which the government spending is productive, substitutable or not for private consumption.

We provide empirical evidence on the Lucas Supply Function based on actual inflation surprises for 19 industrial economies. Our results show that the inflation surprise positively correlates with the output gap and that this relationship is negatively related to inflation variability.

Two counter-intuitive results regarding the number of firms emerge from the existing monopolistic competition literature. First, the number of firms is positively related to the extent of the monopoly power. Second, when the goods market is perfectly competitive, the number of firms is reduced...

This paper presents evidence from a panel investigation of OECD countries that inflationary pressures tend to be stronger during recovery from financial crises compared to recovery from non-crisis economic downturns, indicating impairment in productive potential.

This paper estimates variants of a small-scale New Keynesian model using observations on inflation, inflation expectations and nominal interest rates. We ask whether those variables alone can tell us something about the time series properties of real marginal costs.