Output growth is negatively correlated with inflation and detrended output is positively correlated with inflation in … the major North American and European economies. In addition, output growth and detrended output lead inflation. I explore … the consistency of these correlations with three models of price adjustment: the partial adjustment model, a staggered …

Output growth is negatively correlated with inflation, detrended output is positively correlated with inflation, and … output growth and detrended output lead inflation. I explore the consistency of these correlations with three models of price … adjustment: the partial adjustment model, a staggered price setting model, and the P-bar model. The ratio of the variance of …

, employment adjustment is not frictionless (see, e.g., Mortensen and Pissarides 1994). What does this imply for inflation dynamics … adjustment decision at the firm level rationalizes strategic complementarities in price-setting which help explain inflation …? To address this question we develop a New Keynesian model featuring two margins of labor adjustment as well as a …