Arbeitspapier

A Note on Inflation Persistence

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 (1995) relative contracting model, is highly problematic. Fuhrer and Moore (1995)'s formulation generates inflation persistence, but this is a consequence of their assuming that workers care about the past real wages of other workers. Making the more reasonable assumption that workers care about the current real wages of other workers, one obtains the standard formulation with no inflation persistence.

ISBN
82-7553-205-1
Sprache
Englisch

Erschienen in
Series: Working Paper ; No. 2002/14

Klassifikation
Wirtschaft
Price Level; Inflation; Deflation
Thema
New Keynesian Phillips curve
Fuhrer and Moore model
inflation persistence

Ereignis
Geistige Schöpfung
(wer)
Holden, Steinar
Driscoll, John C.
Ereignis
Veröffentlichung
(wer)
Norges Bank
(wo)
Oslo
(wann)
2002

Handle
Letzte Aktualisierung
10.03.2025, 11:44 MEZ

Datenpartner

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Objekttyp

  • Arbeitspapier

Beteiligte

  • Holden, Steinar
  • Driscoll, John C.
  • Norges Bank

Entstanden

  • 2002

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