A nonlinear New Keynesian (NK) model with more severe downward rigidity in prices has a number of interesting implications. The “standard” NK equilibrium– with the nominal anchor during ELB episodes set by expectations about future monetary policy – exists even for long- lasting ELB...

In this paper we first present supporting evidence of the existence of heterogeneity in inflation dynamics across euro area countries. Based on the estimation of New Phillips Curves for five major countries of the euro area, we find that there is significant inertial (backward looking) behavior...

This paper uses an open economy DSGE model to explore how trade openness affects the transmission of domestic shocks. For some calibrations, closed and open economies appear dramatically different, reminiscent of the implications of Mundell-Fleming style models. However, we argue such stark...