In this paper, I developed a new cost channel of monetary policy transmission in a small scale, dynamic, general equilibrium model. The new cost channel of monetary policy transmission implies that the frequency of price adjustment increases in the nominal interest rate. I found that allowing...

Models in which pricing decisions depend on indexing or rule of thumb behaviour have become prominent in the monetary policy literature and tend to match macroeconomic data well given their prediction of inflation persistence. The extent to which firms index their prices to past inflation has...

In the aftermath of the financial crisis of 2007 - 2008 (and the resulting Great Recession) policymakers became concerned about a potential long-term effect of the crisis on the wider economy. For instance, in an ECFIN Economic Brief titled "The financial crisis and potential growth: Policy...