I analyze the effect of search frictions on inflation dynamics, in a New Keynesian model where firms make both pricing … empirical performance along a number of dimensions. First, inflation becomes more persistent. Second, output responses to …

inflation, the usual type of wage indexation observed in practice. Drawing mainly on recent research by the author, this paper … examines the consequences of wage indexation to lagged inflation on aggregate wage formation, the cost of disinflation under … choice of exchange rate regime, and the level and variability of inflation …

, prompting them to raise markups and prices in anticipation of potentially higher future inflation. These findings establish a … connection between heightened uncertainty, higher core inflation, and increased profits. …

We use a simple New Keynesian model, with firm specific capital, non-zero steady-state inflation, long-run risks and … rate by 150 basis points causes output and inflation volatility to rise around 10% above their steady-state standard … deviations from the policy rule and the results are re-enforced by the presence of non-zero trend inflation. …

inflation targeting. For each rule we distinguish between cases with zero weight on the unemployment gap and a negative response … inflation. Responding to unemployment reduces cross-country differences within the monetary union and the differences in …

inflation persistence. The closer to zero this parameter, (i) the more firms tend to adjust on the intensive margin, reducing … wage in determining the marginal cost. This set-up produces realistic labour market figures together with inflation …

Real wage rigidity is known to create a substantial trade-off between inflation and employment stabilization for …, monetary policy with a single focus on inflation stabilization is close to optimal. The reason is twofold: Firms cushion the …