New Keynesian Phillips Curve and Analysis of Pricing Models

Gradual adjustment of nominal wages and prices is the basis of New Keynesian models. The survey of microeconomic bases of slow adjustment is necessary for the welfare analysis. The reasons for incomplete adjustment of nominal wages and prices are the uncertainty, cost information, and re-negotiations. Note that the correct relationship between inflation and unemployment is important in the political and economic decision. So, in this article, we derive Phillips curve regarded to the incomplete adjustment of nominal wages and prices. In other words, Phillips curve based on the condition is New Keynesian Phillips curve which is related to incomplete adjustment of nominal wages and prices.