Optimal fiscal and monetary policy with sticky wages and sticky prices
Federal Reserve Board
Cash-good/credit-good model with monopolistic competition in both product and labor markets, Rotemberg quadratic adjustment costs for both prices and wages, labor income taxation, and nominally risk-free government debt
intermediate firms: monopolistic competition with Rotemberg price adjustment costs; final goods firms: perfect competition with CES aggregation; employment agencies: perfect competition aggregating differentiated labor
Table 2 p.694
Sticky prices, flexible wages; Ramsey steady-state optimal policy