factorization of innovations. Impulse-response functions aiming to estimate the response of government expenditures to the shock …

inflation, a finding that is at odds with the assumption of constant indexation parameters in most New-Keynesian DSGE models. We … response to aggregate shocks and monetary policy. We show that workers index wages to past inflation when output fluctuations … are primarily explained by technology and permanent inflation-target shocks, whereas they index to trend inflation when …