This paper confronts two views of explaining the empirical macroeconomic sluggishness of output, inflation and wage inflation for the latest U.S. experience. A baseline model of sticky-prices is added with two variants of producing inertia: a) sticky-information applied to firms, workers and households; and b) a backward-looking inflation indexation along with habit formation. These variants yi...

Transitory price changes, namely short lived deviations from a reference price level, are prominent in the data but do not fit neatly in standard sticky price models. We analyze a sticky price model where a firm chooses a price plan, namely a set of 2 prices. Changing the plan entails a menu cost, but either price in the plan can be charged at any point in time. The setup generates a persistent...

The evidence from many experiments suggests that people are heterogeneous with regard to their abilities to make rational, forward looking, decisions. This raises the question when the rational types are decisive for aggregate outcomes and when the boundedly rational types shape aggregate results. We examine this question in the context of a long-standing and important economic problem – the ad...

Gali and Rabanal provide statistical evidence that, in their view, puts into question the real businesscycle paradigm in favor of the sticky-price paradigm. I demonstrate that their statistical procedure is easily misled in that they would reach the same conclusions even if their data had been simulated from an RBC model. I also demonstrate that sticky-price models do a poor job generating U.S....

Price-setting models with monopolistic competition and costs of changing prices exhibit coordination failure: in response to a monetary policy shock, individual agents lack incentives to change prices even when it would be Pareto-improving if all agents did so. The potential welfare gains are in part evaluated relative to a benchmark equilibrium of perfect, costless coordination; in practice, s...

This paper examines a model of dynamic price adjustment based on the assumption that information disseminates slowly throughout the population. Compared to 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...

This paper analyses the implications of cost-push shocks for the optimal choice of monetary policy target in an two-country sticky-price model. In addition to cost-push shocks, each country is subject to labour-supply and money-demand shocks. It is shown that the fully optimal coordinated policy can be supported by independent national monetary authorities following a policy of flexible inflati...

this paper presents a full duplex, real time implementation of itu-t g.723.1 [7,8] speech coder using the tms320c5402 dsp chip which is based on a 16 bit fixed-point architecture. an optimization method is proposed in order to reduce the total necessary cycle time consumed in real-time implementation. the multi-pulse maximum likelihood quantization (mp-mlq) excitation search block which is the ...