“…14 Using the law of motion (26) to substitute for the current, past, and expected future real marginal costs of aggregating goods-d t , d t−1 , E t d t+1 -in ( 22) introduces lags of inflation in the NKPC. Therefore, the model provides a theoretical justification for intrinsic inertia in inflation without relying on ad hoc backward-looking price-setting behavior (e.g., price indexation), as pointed out by Kurozumi and Van Zandweghe (2019).…”