Strategic Complementarities and Optimal Monetary Policy
Board of Governors of the Federal Reserve System
New Keynesian DSGE model with strategic complementarities via quasi-kinked demand (Kimball aggregator) and firm-specific factors (fixed capital/labor at firm level), Calvo staggered price setting, money-in-utility, and Ramsey optimal monetary p
intermediate firms: monopolistic competition with Calvo pricing; final goods firm: perfect competition with Kimball aggregator
Figure 5 p.19
Optimal steady-state inflation under Dixit-Stiglitz preferences (no real rigidities, ψ=0)