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dc.contributor.authorYao, Fangen_US
dc.date.accessioned2011-03-24en_US
dc.date.accessioned2012-04-05T16:21:39Z-
dc.date.available2012-04-05T16:21:39Z-
dc.date.issued2011en_US
dc.identifier.urihttp://hdl.handle.net/10419/56747-
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.publisherSFB 649, Economic Risk Berlinen_US
dc.relation.ispartofseriesSFB 649 discussion paper 2011-008en_US
dc.subject.jelE31en_US
dc.subject.jelE52en_US
dc.subject.ddc330en_US
dc.subject.keywordintrinsic inflation persistenceen_US
dc.subject.keywordhazard functionen_US
dc.subject.keywordtrend inflationen_US
dc.subject.keywordmonetary policyen_US
dc.subject.keywordNew Keynesian Phillips curveen_US
dc.subject.stwGeldpolitiken_US
dc.subject.stwTaylor-Regelen_US
dc.subject.stwInflationen_US
dc.subject.stwHysteresisen_US
dc.subject.stwNew-Keynesian Phillips Curveen_US
dc.subject.stwTheorieen_US
dc.titleMonetary policy, trend inflation and inflation Persistenceen_US
dc.typeWorking Paperen_US
dc.identifier.ppn654776296en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
Appears in Collections:SFB 649 Discussion Papers, HU Berlin

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