The Inflation Research Digest is a quarterly newsletter published by the Cleveland Fed’s Center for Inflation Research. It highlights research events organized by the center and research papers from the Federal Reserve System and other institutions, announces calls for papers for workshops and conferences, and provides links to inflation-related data.
In this webinar, panelists will discuss insights from academic research on central bank independence and accountability. Panelists include Athanasios Orphanides (MIT), Michael D. Bordo (Rutgers University), and Ricardo Reis (London School of Economics and Political Science), with opening remarks from Cleveland Fed president Beth Hammack.
The paper derives an analytical solution to the menu cost model with trend inflation in response to small shocks, yielding a modified Calvo Phillips curve that accounts for the frequency of price adjustment dynamics. Accounting for the frequency of price adjustment only matters in an inflationary economy with nonzero trend inflation. Embedding this new price-setting block in an otherwise standard New Keynesian model, the paper shows how menu costs and trend inflation affect monetary policy.
Source: Adams (2026) Note: The figure plots impulse response functions of inflation (π), output (y), nominal interest rate (i), and frequency of price adjustment (F) to a monetary, cost, and demand shock. The solid blue lines show the responses for the menu cost New Keynesian model, and the dashed red lines indicate the responses for the Calvo New Keynesian model.
Using US historical data from 1840 to 2024, the authors study the macroeconomic effects of tariff policy. The paper shows that a tariff shock is transmitted through both supply and demand channels and that tariff increases are contractionary: imports fall sharply, exports decline with a lag, and output and manufacturing activity drop persistently. Prices rise in the full sample, but they fall after World War II, a finding that the authors argue is consistent with changes in the monetary policy response and with stronger international retaliation and reciprocity in the modern trade regime.
Source: den Besten and Kanzig (2026) Note: This figure plots the tariff shock series based on the narrative analysis of the history of US trade policy over time. Blue bars indicate plausibly exogenous tariff changes, and gray bars indicate endogenous tariff changes.
