Tsoukis, Chris Kapetanios, George Pearlman, Joseph
Year of Publication:
Working Paper, Department of Economics, Queen Mary, University of London 619
We review the main New Keynesian inflation equations that have arisen as a result of aggregation from individual firms' price rigidities. We find that, on the whole, they cannot account for inflation persistence, a key feature of the empirical dynamics of inflation, and with important policy implications. The only exception seems to be when price stickiness is combined with wage rigidity and staggering.