Erceg, Christopher J.; Henderson, Dale W.; Levin, Andrew T. - In: Credit and Capital Markets – Kredit und Kapital 52 (2019) 4, pp. 537-571
We formulate an optimizing-agent model in which both labor and product markets exhibit monopolistic competition and staggered nominal contracts. The unconditional expectation of average household utility can be expressed in terms of the unconditional variances of the output gap, price inflation,...
