We develop and estimate a structural model of inflation that allows for a fraction of firms that use a backward looking … measures of marginal cost as the relevant determinant of inflation, as the theory suggests, instead of an ad-hoc output gap …. Real marginal costs are a significant and quantitatively important determinant of inflation. Backward looking price setting …

inflation and unemployment. Under some assumptions, that relation takes a form similar to that found in empirical applications …. The structural wage equation derived here is shown to account reasonably well for the comovement of wage inflation and the …

as a tool to compare the characteristics of European inflation dynamics with those observed in the U.S. We also analyse … the factors underlying inflation inertia by examining the cyclical behaviour of marginal costs, as well as that of its two … substantial, but in line with survey evidence and US estimates, (c)\ inflation dynamics in the Euro area appear to have a stronger …

for the unemployment-inflation trade-off and for the conduct of monetary policy. We proceed in two steps. We first leave … firms. We derive the relation between inflation and unemployment and discuss how it is influenced by the presence of labour … market frictions and real wage rigidities. We show the nature of the trade-off between inflation and unemployment …

for the mild effects on inflation and economic activity of the recent increase in the price of oil: (a) good luck (i …

approaches generate different projections for inflation and output, even though they imply an identical path for the interest …

and its implications for US output, hours and inflation. Second we evaluate the extent to which those responses can be … the Fed’s policy tended to over stabilize output at the cost of generating excessive inflation volatility. Our evidence …