Sticky Information Versus Sticky Prices: A Proposal to Replace the New Keynesian Phillips Curve

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Sticky Information Versus Sticky Prices: A Proposal to Replace the New Keynesian Phillips Curve

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Title: Sticky Information Versus Sticky Prices: A Proposal to Replace the New Keynesian Phillips Curve
Author: Mankiw, N. Gregory; Reis, Ricardo

Note: Order does not necessarily reflect citation order of authors.

Citation: Mankiw, N. Gregory, and Ricardo Reis. 2002. Sticky information versus sticky prices: A proposal to replace the new Keynesian Phillips curve. Quarterly Journal of Economics 117(4): 1295-1328.
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Research Data: http://hdl.handle.net/1902.1/10495
Abstract: This paper examines a model of dynamic price adjustment based on the assumption that information disseminates slowly throughout the population. Compared with the commonly used sticky-price model, this sticky-information model displays three related properties that are more consistent with accepted views about the effects of monetary policy. First, disinflations are always contractionary (although announced disinflations are less contractionary than surprise ones). Second, monetary policy shocks have their maximum impact on inflation with a substantial delay. Third, the change in inflation is positively correlated with the level of economic activity.
Published Version: http://dx.doi.org/10.1162/003355302320935034
Terms of Use: This article is made available under the terms and conditions applicable to Other Posted Material, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#LAA
Citable link to this page: http://nrs.harvard.edu/urn-3:HUL.InstRepos:3415324
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