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dc.contributor.authorGumbau-Brisa, FabiĆ en_US
dc.date.accessioned2006-01-03en_US
dc.date.accessioned2012-02-23T08:24:14Z-
dc.date.available2012-02-23T08:24:14Z-
dc.date.issued2005en_US
dc.identifier.urihttp://hdl.handle.net/10419/55620-
dc.description.abstractThis paper looks at the implications of heterogeneous beliefs for inflation dynamics. Following a monetary policy shock, inflation peaks after output, is inertial, and can be characterized by a Hybrid Phillips Curve. It presents a novel channel through which systematic monetary policy can affect the degree of inflation persistence. It does so by altering the effective extent of strategic complementarities in pricing, and hence the role of higher-order expectations in the equilibrium. In particular, stronger inflation targeting reduces the impact of uncertainty on the economy and therefore the degree of inertia. It is possible to calibrate at around 25 percent the fraction of relevant information processed every period by the private sector. The imperfect common knowledge framework does not require any exogenous shocks to create heterogeneity. Despite the fact that prices can be adjusted at no cost in every period, there are nominal rigidities, and monetary policy has real effects.en_US
dc.language.isoengen_US
dc.publisherFederal Reserve Bank of Boston Boston, MAen_US
dc.relation.ispartofseriesWorking paper series // Federal Reserve Bank of Boston 05-16en_US
dc.subject.jelD5en_US
dc.subject.jelD8en_US
dc.subject.jelE3en_US
dc.subject.jelE5en_US
dc.subject.ddc330en_US
dc.titleHeterogeneous beliefs and inflation dynamics: A general equilibrium approachen_US
dc.typeWorking Paperen_US
dc.identifier.ppn505089084en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
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