The canonical inflation specification in sticky-price rational expectations models (the new-Keynesian Phillips curve …) is often criticized on the grounds that it fails to account for the dependence of inflation on its own lags. In response …, many recent studies have employed a "hybrid" sticky-price specification in which inflation depends on a weighted average of …

The paper considers an elementary New-Keynesian three equation model and compares its Bayesian estimation to the … results from the method of moments (MM), which seeks to match finite set of the model-generated second moments of inflation …, output and the interest rate to their empirical counterparts. It is found that in the Great Inflation (GI) period - though …