New Keynesian microfundations revisited: a generalised Calvo-Taylor model and the desirability of inflation vs. price level targeting
Optimal monetary policy is sensitive to the Phillips curve specification used to represent the dynamics of inflation and output. Most recent literature has used a new Keynesian Phillips Curve based on Calvo pricing. This paper shows that this workhorse model is not robust to relatively minor changes...
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| Format: | Working paper |
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University of Oxford
2002
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