An Optimization-Based Econometric Framework for the Evaluation of Monetary Policy
Massachusetts Institute of Technology; Princeton University
New Keynesian DSGE model with Calvo staggered price-setting, monopolistic competition, representative household optimization, decision lags for both prices and quantities, and interest-rate feedback rule for monetary policy
Calvo staggered price-setting with fraction 1-alpha adjusting each period; fraction gamma of adjusters post prices immediately, fraction 1-gamma must wait one quarter; Dixit-Stiglitz demand
Table 2 p.331
Minimum-L policy achieving complete inflation stabilization (price stability) without ZLB constraint