Propositions about long-run neutrality are at the heart of macroeconomics. In the 1970s, Lucas and Sargent criticized traditional neutrality tests, suggesting that long-run propositions could not be tested without a detailed structural model. Yet, when nominal variables are integrated, long-run...

To model the observed slow response of aggregate real variables to nominal shocks, most macroeconomic models incorporate real rigidities in addition to nominal rigidities. One popular way of modelling such a real rigidity is to assume a non-constant demand elasticity. By using a homescan data...

For a given frequency of price adjustment, monetary non-neutrality is smaller if older prices are disproportionately more likely to change. This type of selection for the age of prices provides a complete characterization of price-setting frictions in time-dependent sticky-price models....