Mackowiak, Bartosz; Wiederholt, Mirko - 2005
, signals contain no information about future innovations to nominal
aggregate demand and future innovations to the …-
tions. As a result, prices react less to innovations in nominal aggregate demand. In addition,
21
More precisely, κ
∗
1
< (1 … feedback effect. When prices react less to innovations in nominal aggregate de-
mand, the variance of the aggregate price level …