TY - JOUR TI - Inflation Dynamics: A Structural Econometric Analysis T2 - Journal of Monetary Economics IS - 2 KW - cost channel KW - inflation KW - Phillips curve AB - We develop and estimate a structural model of inflation that allows for a fraction of firms that use a backward-looking rule to set prices. The model nests the purely forward-looking New Keynesian Phillips curve as a particular case. We use measures of marginal cost as the relevant determinant of inflation, as the theory suggests, instead of an ad hoc output gap. Real marginal costs are a significant and quantitatively important determinant of inflation. Backward-looking price setting, while statistically significant, is not quantitatively important. Thus, we conclude that the New Keynesian Phillips curve provides a good first approximation to the dynamics of inflation. AU - Gali, Jordi AU - Gertler, Mark UR - http://ecsocman.hse.ru/text/19081530/ PY - 1999 SP - 195-222 M2 - 195 VL - 44 SN - N1 - LA - EN CY - PB - M3 - LB - VL - ER -