results suggest that DNWR may not provide a strong argument against the targeting of low inflation rates, as practiced by many …

try to prevent a cut in nominal wages. If inflation is so low that some nominal wages have to be cut, the strategic … advantage of the workers' induces higher unemployment in equilibrium. The upshot is a long run tradeoff between inflation and … unemployment for low levels of inflation. The prediction that low inflation involves higher unemployment in Europe but not in the …

inflation and persistence in output. The key features of our model are those that prevent a sharp rise in marginal costs after …

monetary policymaking. First, we discuss why trimmed means provide the best measure of core inflation. Second, we outline how … rigidities impede policymakers' ability to control inflation. And third, we describe how alternative shock/rigidity combinations … create inflation's grease (whereby it improves economic efficiency by speeding adjustment) and sand effects (whereby it …

inflation is inertial. Microeconomic data indicate that firms change prices frequently. We formulate and estimate a model which … resolves this apparent micro - macro conflict. Our model is consistent with post-war U.S. evidence on inflation inertia even …

If nominal wages are downward rigid, moderate levels of inflation may improve labor market efficiency by facilitating … higher-inflation environments. Using individual wage change data from two sources, we find that about 6-10 percent of workers … experience nominally rigid wages in a 10- percent inflation environment. This proportion rises to over 15 percent at a 5 percent …