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This Economic Letter looks at the problems with the NKPC and discusses some alternatives that are increasingly being used to think about inflation and the monetary policy transmission mechanism.
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The Calvo pricing model that lies at the heart of many New Keynesian business cycle models has been roundly criticized for being inconsistent both with time series data on inflation and with micro-data on the frequency of price changes. In this paper we show that a modified version of the Gali...
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