The role of relative prices in a generalized new keynesian Phillips curve

recent literature attributes a very large fraction of the inflation volatility to "cost-push shocks." this paper develops and estimates a microfounded dsge model that features a first-order role for relative-price dynamics. a measure of relative price disalignments appears in the new keynesian phillips curve (nkpc) of the model, resembling a cost-push shock. impulse response analysis suggests that an alternative interpretation to the effects of exogenous cost-push shocks in the nkpc relies on the endogenous response of relative prices to exogenous shocks that perturb them.