Imperfect Credibility And Inflation Persistence
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Imperfect Credibility and Inflation Persistence
Author | : Christopher J. Erceg |
Publisher | : |
Total Pages | : 44 |
Release | : 2001 |
Genre | : Inflation (Finance) |
ISBN | : |
Inflation Targets, Credibility, and Persistence in a Simple Sticky-price Framework
Author | : Jeremy Bay Rudd |
Publisher | : |
Total Pages | : 50 |
Release | : 2003 |
Genre | : Inflation (Finance) |
ISBN | : |
Pricing Policies and Inflation Inertia
Author | : Mr.Michael Kumhof |
Publisher | : International Monetary Fund |
Total Pages | : 28 |
Release | : 2003-04-01 |
Genre | : Business & Economics |
ISBN | : 1451851049 |
This paper provides a monetary model with nominal rigidities that differs from the conventional New Keynesian model with firms setting pricing policies instead of price levels. In response to permanent or highly persistent monetary policy shocks this model generates the empirically observed slow (inertial) and prolonged (persistent) reaction of the inflation rate, and also the recession that typically accompanies moderate disinflations. The reason is that firms respond to such shocks mostly through a change in the long-run or inflation updating component of their pricing policies. With staggered pricing policies there is a time lag before this is reflected in aggregate inflation.
Contacts, Credibility and Common Knowledge
Author | : Marcus Miller |
Publisher | : International Monetary Fund |
Total Pages | : 32 |
Release | : 1992-03 |
Genre | : Business & Economics |
ISBN | : |
In this paper three possible reasons are examined for a sluggish inflation response to a hard currency peg. Models of overlapping wage contracts are analyzed and shown to generate little inertia. This contrasts with the effects of government credibility and the speed of private sector learning, which are shown to have a major impact on the speed of inflation adjustment. But even if individual agents believe the government will not devalue, it is shown that inflation inertia can still arise if these expectations are not common knowledge.
Inflation Persistence, Backward-Looking Firms, and Monetary Policy in an Input-Output Economy
Author | : Brad E. Strum |
Publisher | : DIANE Publishing |
Total Pages | : 39 |
Release | : 2011-04 |
Genre | : Reference |
ISBN | : 1437980236 |
This paper studies the implications of inflation persistence (generated by backward-looking price setters) for monetary policy in a New Keynesian "input-output" model -- a model with sticky prices in both intermediate and final goods sectors. Optimal policy under commitment depends on the degree of inflation persistence in both sectors. Under discretion, speed-limit targeting -- targeting the change in the output gap -- outperforms price-level and inflation targeting in the presence of inflation persistence. If inflation persistence is low in the intermediate goods sector, price-level targeting outperforms in inflation targeting despite high inflation persistence in the final goods sector. Illus. This is a print on demand edition of an important, hard-to-find publication.
Inflation Expectations
Author | : Peter J. N. Sinclair |
Publisher | : Routledge |
Total Pages | : 402 |
Release | : 2009-12-16 |
Genre | : Business & Economics |
ISBN | : 1135179778 |
Inflation is regarded by the many as a menace that damages business and can only make life worse for households. Keeping it low depends critically on ensuring that firms and workers expect it to be low. So expectations of inflation are a key influence on national economic welfare. This collection pulls together a galaxy of world experts (including Roy Batchelor, Richard Curtin and Staffan Linden) on inflation expectations to debate different aspects of the issues involved. The main focus of the volume is on likely inflation developments. A number of factors have led practitioners and academic observers of monetary policy to place increasing emphasis recently on inflation expectations. One is the spread of inflation targeting, invented in New Zealand over 15 years ago, but now encompassing many important economies including Brazil, Canada, Israel and Great Britain. Even more significantly, the European Central Bank, the Bank of Japan and the United States Federal Bank are the leading members of another group of monetary institutions all considering or implementing moves in the same direction. A second is the large reduction in actual inflation that has been observed in most countries over the past decade or so. These considerations underscore the critical – and largely underrecognized - importance of inflation expectations. They emphasize the importance of the issues, and the great need for a volume that offers a clear, systematic treatment of them. This book, under the steely editorship of Peter Sinclair, should prove very important for policy makers and monetary economists alike.