4 edition of Inflation persistence and relative contracting found in the catalog.
Inflation persistence and relative contracting
John C. Driscoll
|Statement||John C. Driscoll and Steinar Holden.|
|Series||Finance and economics discussion series ;, 2003-29, Finance and economics discussion series (Online) ;, 2003-29.|
|The Physical Object|
|LC Control Number||2004616505|
Gertler, ), indexation of prices to past inﬂation (Christiano, Eichenbaum and Evans, ), relative contracting models for wages (Fuhrer and Moore, ), or ﬁrms preferring to change older rather than newer prices (Sheedy, a). On the other hand, extrinsic inﬂation persistence is whatever persistence. The New Keynesian Phillips curve (NKPC) asserts that inflation depends on expectations of real marginal costs, but empirical research has shown that purely forward-looking versions of the model generate too little inflation persistence. In this paper, we offer a resolution of the persistence problem. We hypothesize that inflation is highly persistent because of drift in trend inflation, a.
Although the persistence of inflation is a central concern of macroeconomics, there is no consensus regarding whether or not inflation is stationary or has a unit root. We show that, in the context of a “textbook” macroeconomic model, inflation is stationary if and only if the Taylor rule obeys the Taylor principle, so that the real interest rate is increased when inflation rises above the. Inflation Persistence and the Taylor Principle Christian J. Murray University of Houston Alex Nikolsko-Rzhevskyy University of Memphis David H. Papell University of Houston Ap Abstract Although the persistence of inflation is a central concern of macroeconomics, there is no consensusCited by:
Inflation Persistence and the Taylor Principle Christian J. Murray, Alex Nikolsko-Rzhevskyy, and David H. Papell University of Houston Preliminary and Incomplete March Abstract Although the persistence of inflation is a central concern of macroeconomics, there is no. contracts, it is not possible to obtain the inflation persistence observed in the data. As Galí and Gertler () point out, these mod-els imply an aggregate supply relationship (the new Phillips curve) that relates current inflation with expectations of future inflation and real unit-labor costs. Hence, the persistence of price inflation in.
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Inflation Persistence and Relative Contracting Article in American Economic Review 93(4) February with 27 Reads How we measure 'reads'. Downloadable. Macroeconomists have for some time been aware that the New Keynesian Phillips curve, though highly popular in the literature, cannot explain the persistence observed in actual inflation.
We argue that one of the more prominent alternative formulations, the Fuhrer and Moore () relative contracting model, is highly problematic. In particular, the Phelps-Taylor specification implies far too little inflation persistence. The authors present a new contracting model, in which agents are concerned with relative real wages.
Inflation persistence and relative contracting book in actual inﬂation. A number of alternative formulations have been proposed. We argue that one of the more prominent ones, the Fuhrer and Moore () relative contracting model, is highly problematic. Fuhrer and Moore ()’s formulation gen-erates inﬂation persistence, but this is a con-sequence of their assuming that.
This chapter examines the concept of inflation persistence in macroeconomic theory. It begins by defining persistence — emphasizing the difference between reduced-form and structural persistence. It then examines a number of empirical measures of reduced-form persistence, considering the possibility that persistence may have changed over time.
prices but not in inflation, in contrast with the persistence in actual inflation. A number of alternative formulations have been proposed. We argue that one of the more prominent ones, the Fuhrer and Moore () relative contracting model, is highly problematic. Fuhrer and Moore ()’s formulation generates inflation persistence, but this.
Taylor specification implies far too little inflation persistence. We present a new contracting model, in which agents are concerned with relative real wages, that is data-consistent. In a specification that nests both models, we resoundingly reject the conventional contracting model, but cannot reject the new contracting model.
This paper demonstrates that the behavior of the conventional Phelps-Taylor model of overlapping wage contracts stands in stark contrast with important features of U. macro data for inflation and output. In particular, the Phelps-Taylor specification implies far too little inflation persistence.
We present a new contracting model, in which agents are concerned with relative real wages, that. The analysis of inflation persistence is particularly relevant in an economy characterized by relatively high and volatile inflation and inflation expectations above the medium inflation target, which is feature of the Serbian economy.
This motives us to analyze the impact of. 13 relative to its response during In the six years following the start of the recessions inflation fell percent (from % to %), while in the six years I.
Inflation Persistence Several authors have shown that the persistence of inflation has changed markedly over the last years.2 Stock and Watson. Get this from a library. A note on inflation persistence. [Steinar Holden; John C Driscoll; National Bureau of Economic Research.] -- Abstract: Macroeconomists have for some time been aware that the New Keynesian Phillips curve, though highly popular in the literature, cannot explain the persistence observed in actual inflation.
Inflation Persistence, the NAIRU, and the Great Recession by Mark W. Watson. Published in volumeissue 5, pages of American Economic Review, MayAbstract: The rate of inflation fell far less over the period than.
3 Inflation persistence in a generalised Taylor economy (GTE) 15 Generalised Taylor economy (GTE) 16 Calvo-GTE 17 18 4 Generalised Fischer economy (GFE) 18 Simple Fischer economy 19 Mankiw and Reis’s sticky information (SI) model 20 5 Hybrid Phillips curve models 21 Fuhrer and Moore’s () inflation persistence model Inflation Persistence and supply-shifters such as key relative price shifts, summarized in x t.
In such a model, in ation moves gradually, ation and a proxy for contracting and other price-setting frictions. As an empirical matter, the lags helped the model t the data. The quantitative impact of relative wage concern in wage setting for output and inflation persistence is immediate in Fig.
3, which shows the impulse responses for both variables in the two cases, ϕ=0 and our benchmark calibration, following a 1% money shock. Relative wage concern allows for an increase in output persistence from seven to twelve quarters (half-life to six quarters).Cited by: 6.
Inflation Persistence and Relative Contracting (PDF) John C. Driscoll and Steinar Holden Abstract: Macroeconomists have for some time been aware that the New Keynesian Phillips curve, though highly popular in the literature, cannot explain the persistence observed in actual inflation.
THE PERSISTENCE OF INFLATION Thomas M. Humphrey Among the most exasperating and puzzling of re- cent economic phenomena is the apparent intracta- bility of the inflation rate.
Once started, an inflation becomes difficult to subdue. It seems to develop a. Persistence is important because it affects the output costs of lowering inflation back to the target, often described as the “sacrifice ratio”. In this paper I use inflation expectations to provide a comparison of inflation persistence in Brazil with a sample of inflation targeting (IT) countries.
largely mean-reverting, the persistence of inflation has tended to fall. A study of developed economies by Levin and Piger () also finds that inflation persistence has declined.
Some of the evidence from recent studies, or reported in papers for this meeting, suggests that inflation persistence may still be high in a number of by: 5. Inflation expectations and core inflation in the United States have been remarkably stable during the past 10 years, a dramatic break from the pattern seen in the prior two decades, as seen in Figure 1.
Indeed, long-run inflation expectations, as measured by the median response of the Survey of Professional Forecasters have barely budged since. First, inflation persistence - the degree to which current inflation depends on past inflation - appears to have declined.
Second, the relationship between current inflation and the output gap has also fallen. (The output gap is the percent by which actual output deviates from its potential.) Inflation Persistence assuming Constant Long-Term Author: Charles T.
Carlstrom, Bethany Timlin.indicate that inflation persistence has undergone significant changes over the past 60 years. Both methods also support that changes in inflation persistence roughly correspond to changes in monetary policy regimes. Moreover, inflation persistence since the early s is low with the half-life of a shock in the range of one-half to one quarter.Federal Reserve Bank of New York Staff Reports Inflation Persistence: Alternative Interpretations and Policy Implications Argia M.
Sbordone Staff Report no. May This paper presents preliminary findings and is being distributed to economists and other interested readers solely to stimulate discussion and elicit by: