Staggered price contracts and inflation persistence

Despite their popularity as theoretical tools for illustrating the effects of nominal rigidities, some have questioned whether models based on Taylor-style staggered contracts can match the persistence of the empirical inflation process. This paper presents some general theoretical results about Taylor-style models. It is shown that these models do not have a problem matching high autocorrelations for inflation. However, they fail to explain a key feature of reduced-form Phillips-curve regressions: The positive dependence of inflation on its own lags. It is shown that staggered price contracting models instead predict that the coefficients on these lag terms should be negative.

MoreLess

Alternative title:	some general results
Year of publication:	2004
Authors:	Whelan, Karl
Publisher:	European Central Bank
Subject:	Geldpolitik \| Monetary Policy \| Zentralbank \| Central Bank

Full text |

More access options

Check Google Scholar

In German libraries (KVK)

I need help

More details

Extent:	1116160 bytes 45 p. application/pdf
Series:	Working paper series / European Central Bank ; 417
Type of publication:	Book / Working Paper
Language:	English
Classification:	E31 - Price Level; Inflation; Deflation ; Currency. Monetary policy ; Individual Working Papers, Preprints
Source:	ArchiDok