We examine the responses of prices and inflation to monetary shocks in an inventory-theoretic model of money demand. We …

the special case in which prices are sticky and wages are perfectly flexible. When the model is calibrated to exhibit an …

If price levels are initially different across the euro area, convergence to a common level of prices would imply that … inflation will be higher in countries where prices are initially low. Price level convergence thus provides a potential … between 1990 and 1999 prices did become less dispersed in the euro area. Convergence is especially evident for traded goods …

with price stability. Because stable prices are essential to maximum long-term economic growth and living standards, the … first examines the behavior of inflation over the past year, showing that sharp increases in food and energy prices caused … most overall inflation measures to rise, while inflation in nonfood and nonenergy prices slowed. Second, he shows that …

The standard result in models of sticky prices is that an inflation rate target is better than a price level target at … economy that is characterized by flexible prices in one sector and sticky prices in another sector. An example is a highly … open economy that has flexible prices in the tradeable goods sector and sticky prices (due to Taylor-type overlapping wage …