capture inflation dynamics. These models are seen as providing an empirically reasonable characterization of observed … inflation behavior once suitable measures of the output gap are chosen; and, moreover, are perceived to be robust to the Lucas … critique in a way that earlier econometric models of inflation are not. We review the principal conclusions of this literature …

strategic complementarities, is only defined for annualised trend inflation rates of under 5.5%. This critical inflation rate is … below the average inflation rate over recent decades. Furthermore, over the range for which the optimal price is defined …, the slope of the New Keynesian Phillips curve generated by this model is decreasing in trend inflation. That contradicts …

We reformulate the standard open economy new Keynesian model to include positive trend inflation and heterogeneity in … price stickiness suggested by micro-data on prices. We show that when trend inflation is positive, in the standard (single … magnifies this effect, resulting even a smaller determinacy region. When trend inflation is zero, an increase in trade openness …

s may affect inflation and economic activity. This paper considers the implications of this structural change on short …-run inflation dynamics, and for assessing shocks to inflation and output. The importance of firms' price-setting behaviour is … latter. The effects of mark-up shocks on inflation and output are small when firms' price-setting behaviour incorporates …