Should central banks target investment prices?
Boston College and NBER; Boston College
Two-sector New Keynesian model with consumption and investment goods sectors, Calvo pricing in both sectors, sector-specific technology shocks with trends, capital accumulation with adjustment costs, and labor immobile across sectors
monopolistic competition in both sectors with Calvo pricing; constant returns to scale Cobb-Douglas production
Table 3 p.19
CPI inflation targeting rule - monetary policy responds only to consumer price inflation