DP8407 Is there a trade-off between inflation and output stabilization?

Author(s): Alejandro Justiniano, Giorgio E Primiceri, Andrea Tambalotti
Publication Date: June 2011
Keyword(s): optimal policy, output gap, potential output
JEL(s): E30, E52
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=8407

Not in an estimated DSGE model of the US economy, once we account for the fact that most of the high-frequency volatility in wages appears to be due to noise, rather than to variation in workers' preferences or market power.