The policy relevance of new Keynesian inflation dynamics based on the theory of small menu costs and

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The policy relevance of new Keynesian inflation dynamics based on the theory of small menu costs and sticky prices depends on the exploitability of the implied relationship between inflation and real GDP. Explain in your own words why the average time between price adjustments by firms is a crucial determinant of whether policymakers can actively exploit this relationship to try to stabilize real GDP.
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Economics Today

ISBN: 978-0132554619

16th edition

Authors: Roger LeRoy Miller

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