New Keynesian Open Economy Phillips Curve

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New Keynesian Open Economy Phillips Curve

• Razin and Yuen

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Firms Optimization
Nominal
Real
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Flexible prices
Set price one period in advance
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ONE-PERIOD NOMINAL RIDIGITY
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Steady state
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The Phillips Curve
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where
Elasticity of marginal product of labor wrt output
Elasticity of wage demands, wrt to output,
holding marginal utility of income constant
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Log-linearization of real mc
Partial-equilibrium relationship?
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Perfect Capital Mobility
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Closing the capital account
Closing the trade account