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dc.contributor.authorYao, Fangen_US
dc.date.accessioned2011-08-12T09:51:26Z-
dc.date.available2011-08-12T09:51:26Z-
dc.date.issued2011en_US
dc.identifier.urihttp://hdl.handle.net/10419/48718-
dc.description.abstractThis paper presents a new mechanism through which monetary policy rules affect inflation persistence. When assuming that price reset hazard functions are not constant, backward-looking dynamics emerge in the NKPC. This new mechanism makes the traditional demand channel of monetary transmission have a long-lasting effect on inflation dynamics. The Calvo model fails to convey this insight, because its constant hazard function leads those important backward-looking dynamics to be canceled out. I first analytically show how it works in a simple setup, and then solve a log-linearized model numerically around positive trend inflation. With realistic calibration of trend inflation and the monetary policy rule, the model can account for the pattern of changes in inflation persistence observed in the post-wwii U.S. data. In addition, with increasing hazard functions, the "Taylor principle" is sufficient to guarantee the determinate equilibrium even under extremely high trend inflation.en_US
dc.language.isoengen_US
dc.publisherZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften, Leibniz-Informationszentrum Wirtschaft Kiel und Hamburgen_US
dc.relation.ispartofseriesBeiträge zur Jahrestagung des Vereins für Socialpolitik 2011: Die Ordnung der Weltwirtschaft: Lektionen aus der Krise - Session: Inflation C17-V2en_US
dc.subject.jelE31en_US
dc.subject.jelE52en_US
dc.subject.jelE12en_US
dc.subject.ddc330en_US
dc.subject.keywordIntrinsic inflation persistence-
dc.subject.keywordHazard function-
dc.subject.keywordTrend inflation-
dc.subject.keywordMonetary policy-
dc.subject.keywordNew Keynesian Phillips curve-
dc.titleMonetary Policy, Trend Inflation and Inflation Persistenceen_US
dc.typeConference Paperen_US
dc.identifier.ppn671762877en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
dc.identifier.repecRePEc:zbw:vfsc11:48718-
Appears in Collections:Jahrestagung des Vereins für Socialpolitik 2011: Die Ordnung der Weltwirtschaft - Lektionen aus der Krise

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