Partial indexation, trend inflation, and the hybrid Phillips curve
Résumé
This note proposes a full description of the Calvo price-setting model based on partial prices indexation and studies the interaction between partial indexation and trend inflation. We show that using a hybrid version of the Phillips curve partly decreases the risks of overestimate due to the omission of trend inflation.© 2005 Elsevier B.V. All rights reserved.