Integrating Sticky Prices and Sticky Information

@article{Dupor2010IntegratingSP,
  title={Integrating Sticky Prices and Sticky Information},
  author={Bill Dupor and Tomiyuki Kitamura and Takayuki Tsuruga},
  journal={The Review of Economics and Statistics},
  year={2010},
  volume={92},
  pages={657-669}
}
Understanding the relationship between nominal and real variables, most notably inflation and cyclical output, is one of the fundamental questions of economics. Toward this understanding, we develop a model that integrates sticky prices and sticky informationa dual-stickiness model. We find that both rigidities are present in U.S. data. We also show that the dual-stickiness model's closest competitor is the hybrid New Keynesian model. For both models, current inflation depends in part on last… 

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