SHORT-RUN INFLATION DYNAMICS, LONG-RUN INFLATION UNCERTAINTY, AND OUTPUT GROWTH
ELENA-MARIA TUDORABSTRACT. Gnan and Valderrama affirm that, in a closed economy, the price level or inflation are influenced in the short run by the balance between domestic aggregate demand and the economy's production potential. Davig notices that short-run inflation dynamics have an important impact on the appropriate conduct of monetary policy. Carlsson and Westermark claim that downward nominal rigidity is a constraint that changes the choice set and opens up for potential welfare gains.