Kiel Working Papers, Kiel Institute for World Economics
No 1351:
When Inflation Persistence Really Matters: Two examples
Tatiana Kirsanova, David Vines and Simon Wren-Lewis
Abstract: In this paper we present two examples where the presence
of inflation persistence could influence the qualitative nature of monetary
policy. In the first case the desirability of a monetary policy regime
comes under question when extensive inflation persistence exists. In the
second case the direction in which interest rates move following a cost
push shock changes when inflation persistence becomes important. In both
cases, inflation persistence is central to the process influencing
policy.
Keywords: Inflation Persistence, Macroeconomic Stabilisation; (follow links to similar papers)
JEL-Codes: E52,; E61,; E63; (follow links to similar papers)
23 pages, June 2007
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