; and, when prices and wages are not reoptimized, they can be partially adjusted to previous-period aggregate inflation. The …This paper analyzes the dynamics of prices and wages using a limited information approach to estimation. I estimate a … two-equation model for the determination of prices and wages derived from an optimization-based dynamic model in which …

We combine an estimated monetary policy rule featuring time-varying trend inflation and stochastic coefficients with a … medium scale New Keynesian framework calibrated on the U.S. economy. We find the impact of variations in trend inflation on … counterfactual exercises suggest that the change in the Federal Reserve's policy response to inflation is likely to have been the …