The standard New Keynesian model suffers from the so-called .macro-micro pricing conflict: in order to match the dynamics of inflation implied by macroeconomic data, the model needs to assume an average duration of price contracts which is much longer than what is observed in micro data. Here I show how departing from the standard model’s assumption of a perfectly competitive labor market can h...

Conjectures about inflation expectations are inextricably linked to our understanding of the relationship between the real and monetary sides of the economy; yet, direct empirical research on the matter has been scarce at best. This paper therefore examines the empirical properties of inflation expectations data constructed on the basis of both qualitative and quantitative surveys of consumers ...

We analyze the inflation dynamics in Mexico during targeting period by a GMM estimate of Hybrid New Keynesian Phillips Curve its open and closed economy versions. update discuss previous results expand capacity this tool to inflationary incorporating exchange rate on labor costs. find: a) robust evidence adaptive rational expectations; b) improves fit; c) version has strengthened since Great Re...

Heterogeneous beliefs modify the New Keynesian Phillips curve by introducing a term in cross-section distribution of expectations. To take that model to data, we develop novel functional data approach estimation and inference accounts for variation distributions We find this may be summarized using handful factors, demonstrate their statistical economic relevance inflation dynamics. Our results...

This paper considers the linear model with endogenous regressors and multiple changes in the parameters at unknown times. It is shown that minimization of a Generalized Method of Moments criterion yields inconsistent estimators of the break fractions, but minimization of the Two Stage Least Squares (2SLS) criterion yields consistent estimators of these parameters. We develop a methodology for e...