Policy Implications of the New Keynesian Phillips Curve

Schmitt-Groh�, Stephanie; Uribe, Mart�n
September 2008
Economic Quarterly (10697225);Fall2008, Vol. 94 Issue 4, p435
Academic Journal
The article examines on the optimal monetary policy implications concerning the developments of the New Keynesian Phillips curve. It notes that optimal monetary policy is characterized by near price stability which implies the transactions on the demand for money. It found out that the product price stability comes forth as the influencing goal of monetary policy stabilizes in environments with sticky prices. It notes that the framework of the new monetary policy include the expansion on the set of nominal and real rigidities allowing the U.S. government to spend money paid by distortionary taxes, nominal wage rigidity and adjustment to the costs of investment.


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