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SFB 649 Discussion Papers, HU Berlin >
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http://hdl.handle.net/10419/39327
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| Title: | | Can the New Keynesian Phillips Curve explain inflation gap persistence?  |
| Authors: | | Yao, Fang |
| Issue Date: | | 2010 |
| Series/Report no.: | | SFB 649 discussion paper 2010,030 |
| Abstract: | | Whelan (2007) found that the generalized Calvo-sticky-price model fails to replicate a typical feature of the empirical reduced-form Phillips curve - the positive dependence of inflation on its own lags. In this paper, I show hat it is the 4-period-Taylor-contract hazard function he chose that gives rise to this result. In contrast, an empirically-based aggregate price reset hazard function can generate simulated data that are consistent with inflation gap persistence found in US CPI data. I conclude that a non-constant price reset hazard plays a crucial role for generating realistic inflation dynamics. |
| Subjects: | | Inflation gap persistence Trend inflation New Keynesian Phillips curve Hazard function |
| JEL: | | E12 E31 |
| Document Type: | | Working Paper |
| Appears in Collections: | | SFB 649 Discussion Papers, HU Berlin
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