Right here is the house web pageright here is his article on the labor market (with Daniele Caratelli) “Optimum menu value coverage”:
We analytically characterize optimum financial coverage in a multi-sector economic system with menu prices, and present that inflation and output ought to transfer inversely after sectoral shocks. In different phrases, following damaging shocks, inflation ought to be capable to improve, and vice versa. In a reference setting, the optimum coverage stabilizes nominal wages. This nominal wage concentrating on This contrasts with inflation concentrating on, the optimum coverage prescribed by the classical New Keynesian mannequin through which companies are solely allowed to regulate their costs randomly and exogenously. The important thing instinct is that stabilizing inflation causes spillover results throughout sectors, unnecessarily growing the variety of companies that should pay the fastened value of adjusting costs relative to optimum coverage. Lastly, we present in a quantitative mannequin that, following a sectoral shock, nominal wage concentrating on reduces the welfare loss linked to the price of menus by 81% in comparison with inflation concentrating on.