Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/127336
Authors: 
Conrad, Christian
Eife, Thomas A.
Year of Publication: 
2012
Series/Report no.: 
Discussion Paper Series, University of Heidelberg, Department of Economics 521
Abstract: 
In a simple New Keynesian model, we derive a closed form solution for the inflation-gap persistence parameter as a function of the policy weights in the central bank’s Taylor rule. By estimating the time-varying weights that the FED attaches to inflation and the output gap, we show that the empirically observed changes in U.S. inflation-gap persistence during the period 1975 to 2010 can be well explained by changes in the conduct of monetary policy. Our findings are in line with Benati’s (2008) view that inflation persistence should not be considered a structural parameter in the sense of Lucas.
Subjects: 
inflation-gap persistence
Great Moderation
monetary policy
New Keynesian model
Taylor rule
JEL: 
C22
E31
E52
E58
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size
473.77 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.