|
EconStor >
Institut für Weltwirtschaft (IfW), Kiel >
Economists Online >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/10419/3308
|
| | |
| Title: | | Inflation persistence revisited  |
| Authors: | | Karanassou, Marika Snower, Dennis J. |
| Issue Date: | | 2004 |
| Series/Report no.: | | Working paper series, Department of Economics, Queen Mary College, London 518 |
| 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. |
| Subjects: | | Inflation persistence , Wage-price staggering , New Keynesian Phillips curve , Nominal inertia , Monetary policy , Forward-looking expectations |
| JEL: | | E31 E63 E42 E32 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Working Paper Series, School of Economics and Finance, Queen Mary, University of London Publikationen von Forscherinnen und Forschern des IfW Economists Online
|
| |
| | |
Download bibliographical data as:
BibTeX
|
| |
Share on:http://hdl.handle.net/10419/3308
|
Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.
|