For example, judging from the fit of New Keynesian Phillips curves, a substantial fraction of overall inflation variability seems related to supply-type shocks that create a tradeoff between inflation and output-gap stabilization (Kiley, 2007b).
But the key insight from recent research – that the interaction between inflation fluctuations and relative price distortions should lead to a focus on the stability of nominal prices that adjust sluggishly – will likely prove to have important practical implications that can help contribute to inflation and employment stabilization.