We propose a price-setting model which helps reconcile microeconomic evidence of relatively frequent and large price changes with persistent real effects of monetary shocks. In our model, both price adjustments and the gathering of some types of information are costly, requiring the payment of a...

This paper proposes a novel regression-based approach to the estimation of Gaussian dynamic term structure models that avoids numerical optimization. This new estimator is an asymptotic least squares estimator defi ned by the no-arbitrage conditions upon which these models are built. Further, we...