@techreport{Karanassou2004Inflation,
abstract = {It is commonly asserted that inflation is a jump variable in the New Keynesian Phillips curve, and thus wage-price inertia does not imply inflation inertia. We show that this "inflation flexibility proposition" is highly misleading, relying on the assumption that real variables are exogenous. In a general equilibrium setting (in which real variables not only affect inflation, but are also influenced by it) the phenomenon of inflation inertia re-emerges. Under plausible parameter values, high degrees of inflation persistence (prolonged after-effects of inflation in response to temporary money growth shocks) and under-responsiveness (prolonged effects in response to permanent shocks) can arise in the context of standard wage-price staggering models.},
address = {London},
author = {Marika Karanassou and Dennis J. Snower},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {E31; E63; E42; E32; 330; Inflation persistence , Wage-price staggering , New Keynesian Phillips curve , Nominal inertia , Monetary policy , Forward-looking expectations; Inflation; Ungleichgewichtstheorie; Phillips-Kurve; Theorie},
language = {eng},
number = {518},
publisher = {Department of Economics, Queen Mary College},
title = {Inflation persistence revisited},
type = {Working paper series, Department of Economics, Queen Mary College, London},
url = {http://hdl.handle.net/10419/3308},
year = {2004}
}
