Non-constant HazardFunction and InflationDynamics

This paper explores implications of nominal rigidity characterized by a non-constanthazard function for aggregate dynamics. I derive the NKPC under an arbitrary hazardfunction and parameterize it with the Weibull duration model. The resulting Phillips curveinvolves lagged inflation and lagged expectations. It nests the Calvo NKPC as a limitingcase in the sense that the e¤ects of both terms are canceled out under the constant-hazardassumption. Furthermore, I …nd lagged inflation always has negative coe¢ cients, therebymaking it impossible to interpret inflation persistence as intrinsic. The numerical evaluationshows that the increasing hazard function leads to hump-shaped impulse responses of inflationto monetary shocks, and output leads inflation.