explain the variation across time and countries of inflation patterns. In our model's equilibrium, profit differentials … increasing in inflation. Depending on the distribution of price revision costs, if enough sticky price firms choose to revise … their prices, the monetary authority's benefit from inflation is reduced to the point that the model has a unique, low …

private agents’ expectations determine the equilibrium level of inflation). In our model, sticky price firms are allowed to … switch to flexible pricing by paying a random cost. For plausible parametrizations, our model has a unique low-inflation … equilibrium. With endogenous sticky prices, the monetary authority does not validate high-inflation expectations and deviates to …