We present a new way of empirically evaluating various sticky price models used to assess the degree of monetary non-neutrality. While menu cost models uniformly predict that price change skewness and dispersion fall with inflation, in the Calvo model both rise. However, CPI price data from the...

This paper offers a detailed investigation of the foreign exchange risk premium using a structural relationship in the inflation-index bond market, firstly introduced by Clarida (2012). Unlike the conventional VAR approach, this approach estimates risk premium through the non-arbitrage...

Firms are connected through the production network. Meanwhile, the production linkages coincide with financial linkages owing to delays in input payments that amount to a form of trade credit. In this paper, I investigate the roles of these interconnected production and financial linkages in the...

Optimal monetary policy depends crucially on whether agents have exogenous, endogenous-inelastic, or endogenous-elastic attention. We show in this paper that, under elastic attention, optimal monetary policy may induce equilibria that are not possible under the other two settings: decision...