The Inflation Accelerator
Andres Blanco,
Corina Boar (),
Callum Jones and
Virgiliu Midrigan
No 12, FRB Atlanta Working Paper from Federal Reserve Bank of Atlanta
Abstract:
We develop a tractable sticky price model in which the fraction of price changes evolves endogenously over time and, consistent with the evidence, increases with inflation. Because we assume that firms sell multiple products and choose how many, but not which, prices to adjust in any given period, our model admits exact aggregation and reduces to a one-equation extension of the Calvo model. This additional equation determines the fraction of price changes. The model features a powerful inflation accelerator—a feedback loop between inflation and the fraction of price changes—that significantly increases the slope of the Phillips curve during periods of high inflation. Applied to the U.S. time series, our model predicts that the slope of the Phillips curve ranges from 0.02 in the 1990s to 0.12 in the 1970s and 1980s.
Keywords: Phillips curve; inflation; price rigidities (search for similar items in EconPapers)
JEL-codes: E31 E32 E52 (search for similar items in EconPapers)
Pages: 50
Date: 2024-09-23
New Economics Papers: this item is included in nep-his and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations:
Published in 2024
Downloads: (external link)
https://www.atlantafed.org/-/media/documents/resea ... tion-accelerator.pdf Full text (application/pdf)
Related works:
Working Paper: The Inflation Accelerator (2024) 
Working Paper: The Inflation Accelerator (2024) 
Working Paper: The Inflation Accelerator (2024) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:fip:fedawp:99192
Ordering information: This working paper can be ordered from
DOI: 10.29338/wp2024-12
Access Statistics for this paper
More papers in FRB Atlanta Working Paper from Federal Reserve Bank of Atlanta Contact information at EDIRC.
Bibliographic data for series maintained by Rob Sarwark ().