Key points are not available for this paper at this time.
We present a model embodying moderate amounts of nominal rigidities that accounts for the observed inertia in inflation and persistence in output. The key features of our model are those that prevent a sharp rise in marginal costs after an expansionary shock to monetary policy. Of these features, the most important are staggered wage contracts that have an average duration of three quarters and variable capital utilization.
Christiano et al. (Tue,) studied this question.
Synapse has enriched 5 closely related papers on similar clinical questions. Consider them for comparative context: