[4] In their famous paper “Menu Costs and Phillips Curves”, Mikhail Golosov and Robert Lucas investigated the implications of this evidence for the effects of monetary policy in a dynamic equilibrium model with idiosyncratic shocks and a fixed cost of nominal price changes.
d = d –1 (1 + i)/(1 + g) + p.  (A3)  If there is stability in the debt-to-GDP ratio, d = d –1 = d. Then d (1 – (1 + i)/(1 + g)) = p  (A4)  and d (g – i)/(1 + g) = p  (A5)  This is equation 2 in the text.