This chapter reviews the role of temporary price and wage rigidities in explaining of the dynamic relationship between money, real output, and inflation. The key properties to be explained are that monetary shocks have persistent, but not permanent, effects on real output, and that the...

The Handbook of Macroeconomics provides a survey of the state of knowledge in the broad area that includes the theories and facts of economic growth and economic fluctuations, as well as the consequences of monetary and fiscal policies for general economic conditions. Macroeconomic issues are...

The Handbook of Macroeconomics provides a survey of the state of knowledge in the broad area that includes the theories and facts of economic growth and economic fluctuations, as well as the consequences of monetary and fiscal policies for general economic conditions. Macroeconomics underwent a...

This paper focuses on simple normative rules for monetary policy that central banks can use to guide their interest rate decisions. Such rules were first derived from research on empirical monetary models with rational expectations and sticky prices built in the 1970s and 1980s. During the past...