conclusions that arise from the model. In the new model, the level and the variability of inflation is higher than in the Calvo …It has been shown that extending the Calvo model to account for the heterogeneity in price stickiness suggested by the … model with no selection effect. Attempting to lower inflation's variability results in a significant increase output …

output and inflation, as observed in a vectorautoregression analysis. In contrast to backward indexation to past inflation …, which is often assumed in the literature, sticky information leads to a hump-shaped response in the inflation of flexibly …