Staggered price contracts and inflation persistence: some general results

Karl Whelan ()

No 417, Working Paper Series from European Central Bank

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 Taylor-style models. It is shown that these models do not have a problem matching high auto-correlations 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. JEL Classification: E31

Keywords: inflation persistence; staggered contracts (search for similar items in EconPapers)
Date: 2004-11
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Citations: View citations in EconPapers (24)

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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:ecb:ecbwps:2004417

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