Abstract
This paper estimates the New Keynesian Phillips Curve (NKPC) with imperfect exchange rate pass-through (alternatively, deviations from the law of one price). Our results describe the nature of inflation dynamics and business cycles under imperfect pass-through, with importance of both domestic price rigidity and import price rigidity for the US and other four open economies. The estimates of structural parameters of the import price and domestic price rigidities are not same and affect inflation-output gap elasticity and inflation-law of one price gap elasticity. The results yield implications for the stabilisation of real activity (also domestic inflation) compared to the deviations from the law of one price.
References
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Articles in the same Issue
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- The Macroeconomic Impact of the 1918–19 Influenza Pandemic in Sweden
- Aggregate Costs of a Gender Gap in the Access to Business Resources
- The Macroeconomic Effects of Shadow Banking Panics
- Wealth Inequality and the Exploration of Novel Technologies
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- Progressive Taxation and Robust Monetary Policy
- The New Keynesian Phillips Curve and Imperfect Exchange Rate Pass-Through
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Articles in the same Issue
- Frontmatter
- Advances
- The Macroeconomic Impact of the 1918–19 Influenza Pandemic in Sweden
- Aggregate Costs of a Gender Gap in the Access to Business Resources
- The Macroeconomic Effects of Shadow Banking Panics
- Wealth Inequality and the Exploration of Novel Technologies
- Contributions
- Learning, Central Bank Conservatism, and Stock Price Dynamics
- Progressive Taxation and Robust Monetary Policy
- The New Keynesian Phillips Curve and Imperfect Exchange Rate Pass-Through
- The Macroeconomic Impact of Social Unrest
- Interest Rates, Money, and Fed Monetary Policy in a Markov-Switching Bayesian VAR
- Un-Incorporation and Conditional Misallocation: Firm-Level Evidence from Sri Lanka
- Idiosyncratic Shocks, Lumpy Investment and the Monetary Transmission Mechanism
- Open Economy Neoclassical Growth Models and the Role of Life Expectancy