The recent works of Gali and Gertler (1999) and Gali, Gertler and Lopez-Salido (2001) provide evidence supporting the New Keynesian Phillips curve (NKPC). This model posits the dynamics of inflation as being forward-looking and related to real marginal costs. In this paper, we examine the...

The authors assess the ability of the Hodrick-Prescott filter (HP) and the band-pass filter proposed by Baxter and King (BK) to extract the business-cycle component of macroeconomic time series by using two different definitions of the business-cycle component. First, they define that component...