Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/32609
Authors: 
Sienknecht, Sebastian
Year of Publication: 
2010
Series/Report no.: 
Jena economic research papers 2010,023
Abstract: 
This paper shows how endogeneous inflation inertia is generated by a simple modificaton of the quadratic adjustment cost structure faced by economic agents. We derive the pertinent inflation relationships based on purely nominal rigidities and show that they always involve additional expectation terms which are absent in a Calvo-type environment. However, the structural differences do not prevent dynamic adjustment paths and theoretical moments to be similar under both rigidity assumptions. An extensive application of nominal adjustment frictions leads to a full-scale macroeconomic framework able to replicate empirical responses to an interest rate shock.
Subjects: 
Inflation Dynamics
New Keynesian Phillips Curve
Business Fluctuations
JEL: 
E31
E32
E52
Document Type: 
Working Paper

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