We include these types of price terms today in our forecasting equations, and they are important to forming our views of the inflation outlook and thus to the policy process. Another early development within the framework was the buttressing of its microeconomic foundations, in particular by paying more careful attention to the modeling of nominal rigidities.
John Taylor's staggered-contracts framework remains a touchstone because of its intuitive appeal - annual wage reviews are a familiar experience for most people who work. Much subsequent work - including, recently, among economists at the European Central Bank and the euro-area national central banks has confirmed the key assumption underlying this model, which is that wages and prices are changed infrequently.