TY  - JOUR
AU  - Mankiw,N. Gregory
AU  - Reis,Ricardo
TI  - Sticky Information Versus Sticky Prices: A Proposal to Replace the New Keynesian Phillips Curve
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8290
PY  - 2001
Y2  - May 2001
UR  - http://www.nber.org/papers/w8290
L1  - http://www.nber.org/papers/w8290.pdf
N1  - Author contact info:
N. Gregory Mankiw
Department of Economics
Littauer 223
Harvard University
Cambridge, MA  02138
Tel: 617/495-4301
Fax: 617/495-7730
E-Mail: ngmankiw@fas.harvard.edu

Ricardo Reis
Department of Economics, MC 3308
Columbia University
420 West 118th Street, Rm. 1022 IAB
New York  NY  10027
Tel: 212-851-4007
Fax: 212-854-8059
E-Mail: rreis@columbia.edu
AB  - This paper examines a model of dynamic price adjustment based on the assumption that information disseminates slowly throughout the population. Compared to the commonly used sticky-price model, this sticky-information model displays three, related properties that are more consistent with accepted views about the effects of monetary policy. First, disinflations are always contractionary (although announced disinflations are less contractionary than surprise ones). Second, monetary policy shocks have their maximum impact on inflation with a substantial delay. Third, the change in inflation is positively correlated with the level of economic activity.
ER  -