socially desirable. I consider an environment with dispersed information and two aggregate shocks: a productivity shock and a …

appointment of Volcker marked a change in the conduct of monetary policy, but inflation dropped only when fiscal policy … accommodated this change two years later. In fact, a disinflationary attempt of the monetary authority leads to more inflation if … been confident about the switch, the Great Inflation would not have occurred and debt would have been higher. This is …

not. However, he assumes that agents can directly observe the monetary policy shock. Reversing this assumption, I find the … that a threat by the Fed to move to an "unlearnable" equilibrium for all but one value of inflation is a poor foundation …

and data. Second, because the NK model's predictions differ by the nature of the shock, we present evidence on the … procyclical conditional on a technology shock. However, we find that they are either procyclical or acyclical conditional on …

shock. Our estimated model uncovers a central role for investment in the transmission mechanism of monetary policy, as high …

preference or more generally a demand shock. More recently two other explanations have been advocated: surprise changes in …

policy analysis, researchers should use a menu cost model like ours or at least a third, theory-based shortcut: set the Calvo …