Trend inflation, endogenous mark-ups and the non-vertical Phillips curve

Giovanni Di Bartolomeo (), Patrizio Tirelli and Nicola Acocella

No 65, CIMEO, Sapienza University of Rome from Department of Economics and Law, Sapienza University of Rome

Abstract: Recent developments in macroeconomics resurrect the view that welfare costs of inflation arise because the latter acts as a tax on money balances. Empirical contributions show that wage re-negotiations take place while expiring contracts are still in place. Bringing these seemingly unrelated aspects together in a stylized general equilibrium model, we find a disciplining effect of a positive inflation target on the wage markup and identify a long-term trade-off between inflation and output.

Keywords: trend inflation; long-run Phillips curve; inflation targeting; real money balances (search for similar items in EconPapers)
JEL-codes: E24 E52 E58 (search for similar items in EconPapers)
Date: 2010-04
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.dipecodir.it/wpcom/data/wp_no_65_2010.pdf (application/pdf)

Related works:
Working Paper: Trend inflation, endogenous mark-ups and the non-vertical Phillips curve (2010)
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:ter:wpaper:0065

Access Statistics for this paper

More papers in CIMEO, Sapienza University of Rome from Department of Economics and Law, Sapienza University of Rome
Bibliographic data for series maintained by Giovanni Di Bartolomeo ().