Keynesian model we show that, if households have hyperbolic discounting, small positive rates of inflation can be optimal. In … our baseline calibration, the optimal rate of inflation is 2.1% and remains positive across a wide range of calibrations …

correcting for measurement error, wages appear to be very sticky. In the average quarter, the probability that an individual will … consumer price inflation rate …

state contingent inflation taxes/subsidies to smooth those rents. Hence, in the optimal Ramsey plan, inflation deviates from … zero and the optimal volatility of inflation is an increasing function of firing costs. The optimal rule should react to … employment alongside inflation …

We present a new theory of wage adjustment, based on worker loss aversion. In line with prospect theory, the workers … price. Firms adjust wages flexibly in response to variations in labor demand. The resulting theory of wage adjustment is …

period. The workers' bargaining power in the hours negotiation affects both unemployment volatility and inflation persistence … cost determination. This set-up produces realistic labor market statistics together with inflation persistence …

We model empirically the role of labor market institutions in affecting the response of inflation to labor market and …-country differences in inflation adjustment for the "sheltered" (non-trading) sector; the effects in the "exposed" (trading) sector are … the Phillips curve in both sectors. More active LM policies also reduce the persistence of inflation. However, but only in …