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  5. Staggered price contracts and inflation persistence : some general results
 
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Staggered price contracts and inflation persistence : some general results

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Download whelank_workpap_019.pdf226.89 KB
Author(s)
Whelan, Karl 
Uri
http://hdl.handle.net/10197/236
Date Issued
October 2004
Date Available
12T14:26:55Z June 2008
Abstract
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 the 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.
Type of Material
Technical Report
Publisher
Central Bank of Ireland
Copyright (Published Version)
2004 Copyright Central Bank of Ireland
Subject – LCSH
Inflation (Finance)--Mathematical models
Web versions
http://www.centralbank.ie/data/TechPaperFiles/8RT04.PDF
Language
English
Status of Item
Not peer reviewed
This item is made available under a Creative Commons License
https://creativecommons.org/licenses/by-nc-sa/1.0/
Owning collection
Economics Research Collection
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