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http://dspace.mediu.edu.my:8181/xmlui/handle/10419/3308| Title: | Inflation persistence revisited |
| Keywords: | E31 E63 E42 E32 ddc:330 Inflation persistence , Wage-price staggering , New Keynesian Phillips curve , Nominal inertia , Monetary policy , Forward-looking expectations Inflation Ungleichgewichtstheorie Phillips-Kurve Theorie |
| Issue Date: | 16-Oct-2013 |
| Publisher: | Department of Economics, Queen Mary College London |
| Description: | It is commonly asserted that inflation is a jump variable in the New Keynesian Phillips curve, and thus wage-price inertia does not imply inflation inertia. We show that this "inflation flexibility proposition" is highly misleading, relying on the assumption that real variables are exogenous. In a general equilibrium setting (in which real variables not only affect inflation, but are also influenced by it) the phenomenon of inflation inertia re-emerges. Under plausible parameter values, high degrees of inflation persistence (prolonged after-effects of inflation in response to temporary money growth shocks) and under-responsiveness (prolonged effects in response to permanent shocks) can arise in the context of standard wage-price staggering models. |
| URI: | http://koha.mediu.edu.my:8181/xmlui/handle/10419/3308 |
| Other Identifiers: | http://hdl.handle.net/10419/3308 ppn:396014976 |
| Appears in Collections: | EconStor |
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