ECIN Replication Package for "Inflation surprises in a New Keynesian economy with a "true" consumption function"

The resurgence of inflation has been accompanied by a reversal of prospects of growth, with a prominent role
assigned to the fall of households' purchasing power. Yet this real income
effect of inflation surprises, independent of restrictive monetary policy, is
not present in the standard New Keynesian models for monetary policy. The
reason lies in the formulation of the consumption-based "IS
equation". The paper shows how the income effect can be introduced by
reformulating the consumption function, with the consequence that it exerts an
autonomus stabilization effect on inflation. The main monetary policy
implications are examined by means of simulations.<br>