Staggered prices in a utility-maximizing framework
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...It is also able to match the negative correlation of output with lagged nominal interest rates that King and Watson (1996) find cannot be explained by an optimizing model with Calvo-style staggered price setting similar to our own. Fuhrer (1997b) also draws attention to this correlation and suggests that a "backwards looking" IS curve is needed to explain it....
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...supply equation obtained from models such as those of Rotemberg (1982) and Calvo (1983), called by Roberts (1995) "the New Keynesian Phillips Curve....
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...Following Calvo (1983), we assume that prices are changed at exogenous random intervals....
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