Showing 1 - 10 of 124
In this paper, we consider a model where producers set their prices based on their prediction of the aggregated price level and an exogenous variable, which can be a demand or a cost-push shock. To form their expectations, they use OLS-type econometric learning with bounded memory. We show that...
Persistent link: https://www.econbiz.de/10011263417
If long-term inflation expectations are well-anchored, they should be unaffected by short-term economic news. This letter introduces news-regressions with multiple endogenous breaks to investigate the de- and re-anchoring of US inflation expectations. We confirm earlier evidence on the...
Persistent link: https://www.econbiz.de/10011189509
Since the mid-1980s, Phillips curve forecasts of US inflation have been inferior to those of a conventional causal autoregression. However, little change in forecast accuracy is detected against the benchmark of a noncausal autoregression, more accurately characterizing US inflation dynamics.
Persistent link: https://www.econbiz.de/10010572258
Using the same data as Chow and Wang (2010) [Chow, Gregory C., Wang, Peng, 2010. The empirics of inflation in China. Economics Letters 109, 28–30], as well as a smooth transition regression model, this paper reconsiders the empirics of inflation in China. The estimated smooth transition error...
Persistent link: https://www.econbiz.de/10010662397
We test the predictions of the sticky information model using a survey dataset by comparing shoppers’ accuracy in recalling the prices of regulated and comparable unregulated products. Because regulated product prices are capped, they are sold more than comparable unregulated products, while...
Persistent link: https://www.econbiz.de/10015210337
We use micro level retail price data from convenience stores to study the link between 0-ending price points and price rigidity during a period of a runaway inflation, when the annual inflation rate was in the range of 60%–430%. Surprisingly, we find that more round prices are less likely to...
Persistent link: https://www.econbiz.de/10012507272
This paper examines the role of habit formation in a standard state-dependent pricing (SDP) model. Incorporating habit formation helps the SDP model to generate hump-shaped and more persistent output responses under a monetary shock. More importantly, incorporating habit formation causes...
Persistent link: https://www.econbiz.de/10010776611
We investigate the role of sticky wages in accounting for real exchange rate dynamics. Unlike the sticky price economy, government spending shocks play a more important role than technology shocks in explaining the hump-shaped impulse responses of real exchange rates.
Persistent link: https://www.econbiz.de/10010906370
Central banks face uncertainty about potential output. We model optimal monetary policy under discretion in a situation in which the central bank adopts a min–max approach to policy. The case for appointing a conservative central banker who puts a larger weight on inflation stabilization...
Persistent link: https://www.econbiz.de/10010906373
We explore the role of the cost channel in accounting for inflation persistence in the New Keynesian model with Calvo pricing. Hump-shaped responses of inflation to monetary shocks are obtained under purely nominal rigidities.
Persistent link: https://www.econbiz.de/10011076533