Abstract

HERNANDEZ, Kólver. The role of relative prices in a generalized new keynesian Phillips curve. EconoQuantum [online]. 2008, vol.5, n.1, pp.35-59. ISSN 2007-9869.

Recent literature attributes a very large fraction of the inflation volatility to "cost-push shocks." This paper develops and estimates a microfounded DSGE model that features a first-order role for relative-price dynamics. A measure of relative price disalignments appears in the new Keynesian Phillips curve (NKPC) of the model, resembling a cost-push shock. Impulse response analysis suggests that an alternative interpretation to the effects of exogenous cost-push shocks in the NKPC relies on the endogenous response of relative prices to exogenous shocks that perturb them.

Keywords : Relative prices; inflation dynamics; output fluctuations.

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