the unemployment rate, as the gap is estimated endogenously within the model), as well as for projected inflation expectations, yields a significantly steeper profile for inflation excluding food and energy over the next two-and-a-half years (Figure 10).
For example, by now in academia and in central banks, the New Keynesian dynamic stochastic general equilibrium framework, which includes an expectations-augmented Phillips curve, provides one of the workhorse models for monetary policy analysis. The policy advice offered by this framework stresses the importance of the management of private sector expectations even more than the traditional time inconsistency literature.