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New Keynesian Microfoundations Revisited: A Calvo-Taylor-Rule-of-Thumb Model and Optimal Monetary Policy Delegation

Abstract:

We analyze the microfoundations of the Phillips curve and the close links between that relationship and results concerning optimal monetary policy, stabilisation bias and monetary policy delegation. Most recent literature has used a New Keynesian Phillips Curve based on Calvo pricing, often with an additional lagged inflation term motivated by rule-of-thumb behaviour. We develop a framework which encompasses this workhorse model while allowing for a richer time dependent pricing rule. This pe...

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Publisher:
Department of Economics (University of Oxford)
Series:
Discussion paper series
Publication date:
2003-01-01
Language:
English
UUID:
uuid:fdf1cce0-a24c-4108-8285-aee30d244fb6
Local pid:
ora:1213
Deposit date:
2011-08-16

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