Gradual adjustment of nominal wages and prices is the basis of NEW KEYNESIAN MODELS. The survey of microeconomic bases of slow adjustment is necessary for the welfare analysis.The reasons for incomplete adjustment of nominal wages and prices are the uncertainty, cost information, and re- negotiations. Note that the correct relationship between inflation and unemployment is important in the political and economic decision. So, in this article, we derive Phillips curve regarded to the incomplete adjustment of nominal wages and prices. In other words, Phillips curve based on the condition is NEW KEYNESIAN Phillips curve which is related to incomplete adjustment of nominal wages and prices.

Hybrid NEW KEYNESIAN Phillips curve in the present study, using quarterly data over the period to 4q1389 1q1375 based on GMM is estimated, using the criteria stipulated Kayyk an ARIMA model was In the end, inflation, using both MODELS, in both four and eight-period horizon, and the root mean square error of prediction MODELS were compared HNKPC estimation results indicate that past prices influence future prices more than the rate of inflation and the output gap was positive and significant. Shows that increasing the level of potential output gap, inflation increased by 41%, ie expansionary policies to enhance product will lead to inflation. Then specify a model ARMA (4, 4) and inflation forecasts, the results show that both forecast horizons, NEW KEYNESIAN Phillips curve, the root mean square error (RMSE) is less than the ARMA model and better able to predict inflation.

Depending on the assumptions that are made in NEW KEYNESIAN MODELS, one can attain different NEW KEYNESIAN Phillips curves. In this study, three different NEW KEYNESIAN Phillips curves and two different central bank behavioural functions are presented which leaves six NEW KEYNESIAN DSGE MODELS to study. The purpose of this study is the comparison of these six MODELS and selecting the best model that fits to Iranian economy. The results show that the Phillips curve with both lagged inflation and expected inflation can be the best model in explaining the economy of Iran. Considering the formation of inflation in each period, it seems that the weight of lagged inflation is greater than the weight of expected inflation. The selected model forecasts a continuous recession during 1387, but the economy will be in expansion in 1388.

Knowledge of the relationship between two phenomena (inflation and unemployment) is crucial to any economic and political decision-making process. An investigation of this relationship helps economists and policymakers to be aware of the economy’s performance. In the present research, NEW-KEYNESIANs’ Philips hybrid curve has been derived by using the pricing MODELS and the assumption of price and wage rigidity. Friedman- Phelps Philips curve and NEW-KEYNESIAN Philips curve are special types of NEW-KEYNESIAN Hybrid Philips curves. The model used for rigidity of prices and wages in this article is pricing model of callow. Then, we have estimated this curve for Iranian economy for the time 1975-2007 by using GMM method.The results indicate that the firms have both backward and forward looking considerations in setting their prices.