Recent studies on shifting trend inflation use the Standard New Keynesian model with Calvo price settingto address welfare issues. Within this framework, the transmission mechanism gets mainly through pricedispersion as an inefficient source of distortion in the output. As a result, firms have...

Different methods have been used in the literature to measure and analyze price markup cyclicalbehavior. We use a medium-scale DSGE Model with positive trend inflation, in which neutral technology,the marginal efficiency of investment, and monetary policy shocks drive aggregate fluctuations and...

The existing literature on shifting trend inflation has, for the most part, focused on the Calvo staggered nominal contracts to address welfare issues. This paper proposes alternative nominal contracts in the form of Taylor in a fully specified medium small-scale New Keynesian Model featuring...