New essay: It was a mistake to switch to sticky price models from sticky wage models
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https://basilhalperin.com/essays/sticky-prices-vs-sticky-wages.html
TLDR:
Intuitively, wage stickiness seems more important than price stickiness
The first microfounded ‘new Keynesian’ models did use wage stickiness, not price stickiness; but in the mid-1980s there was a transition to sticky price models, which dominate today
But that transition was based on a set of arguments which today are regarded as wrong!
The policy implication: Taking wage stickiness seriously implies we should ensure stable nominal wage growth, not stable price inflation
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