Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/153106
Authors: 
Dixon, Huw
Kara, Engin
Year of Publication: 
2006
Series/Report no.: 
ECB Working Paper 672
Abstract: 
This paper adopts the Impulse-Response methodology to understand inflation persistence. It has often been argued that existing models of pricing fail to explain the persistence that we observe. We adopt a common general framework which allows for an explicit modelling of the distribution of contract lengths and for different types of price setting. In particular, we find that allowing for a distribution of contract lengths can yield a more plausible explanation of inflation persistence than indexation.
Subjects: 
DGE models
inflation
Persistence
price-setting
JEL: 
E17
E3
Document Type: 
Working Paper

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