Staggered price contracts and inflation persistence: some general results

Karl Whelan ()

Open Access publications from School of Economics, University College Dublin

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.

Keywords: Inflation; (Finance)--Mathematical; models (search for similar items in EconPapers)
Date: 2004-10
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Citations: View citations in EconPapers (22)

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http://hdl.handle.net/10197/236 Open Access version, 2004 (application/pdf)

Related works:
Journal Article: STAGGERED PRICE CONTRACTS AND INFLATION PERSISTENCE: SOME GENERAL RESULTS (2007)
Working Paper: Staggered Price Contracts and Inflation Persistence: Some General Results (2004)
Working Paper: Staggered price contracts and inflation persistence: some general results (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:ucn:oapubs:10197/236

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