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Monetary policy analysis with exogenously given nominal rigidities is subject to Lucas' critique, if the degree of them varies over policy regimes as recent empirical studies point out. In a Calvo style sticky price model, we endogenize nominal rigidities and examine its implications for monetary policy. While previous studies stress that the frequency of price adjustment changes with steady state inflation, we focus on how this frequency varies in response to changes in the Taylor rule in the same steady state. We find that a more aggressive policy response to inflation makes firms less likely to reset their prices, resulting in a flat slope of the New Keynesian Phillips curve as observed in the post-1982 U.S. economy and a small variance of shocks to the curve as in the Great Moderation. We also find that an aggressive policy response to inflation can stabilize both inflation and the output gap by exploiting the feedback effect of the policy stance on firms' price setting. Taking into account this effect is thus crucial to the policy conduct. Further, we show that an endogenous inflation weight of the social welfare loss function is critical to policy evaluation, since this weight changes significantly with the frequency of price adjustment.

This paper proposes a new estimation framework for identifying monetary policy shocks in both conventional and unconventional policy regimes using a structural VAR model. Exploiting a latent threshold modeling strategy that induces time-varying shrinkage of the parameters, we explore a recursive identification switching with a time-varying overidentification for the interest rate zero lower bound. We empirically analyze Japan's monetary policy to illustrate the proposed approach for modeling regime-switching between conventional and unconventional monetary policy periods, and find that the proposed model is preferred over a nested standard time-varying parameter VAR model. The estimation results show that increasing bank reserves lowers long-term interest rates in the unconventional policy periods, and that the impulse responses of inflation and the output gap to a bank reserve shock appear to be positive but highly uncertain. JEL classification: C32; E52

Peritonitis due to nontuberculous mycobacterium in peritoneal dialysis (PD) patients is rare. However, when it occurs, PD catheter removal is required in most cases because of resistance to antibiotic therapy. We report a case of Mycobacterium abscessus peritonitis subsequent to tunnel infection after PD catheter-replacement surgery. The patient underwent this surgery as her tunnel infection had not resolved following the usual 3 month course of antibiotic therapy. After surgery, tunnel infection of the second catheter and peritonitis occurred. Nontuberculous mycobacteria were detected on acid-fast stain from both the old and new exit-site drainage and the peritoneal effluent. The mycobacteria were identified as M. abscessus. Removal of the new catheter and surgical excision of the previous catheter tunnel were performed and multiple antibiotics were started. After 3 months the postsurgical wounds had healed completely. This case demonstrates the importance of further evaluation of unidentified PD catheter-related infections, including an examination for nontuberculous mycobacterium.

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