Inflation and the Timing of Actions With Discretionary Monetary Policy

Willem Van Zandweghe and Alexander Wolman

Richmond Fed Economic Brief, 2025, vol. 25, issue 40

Abstract: The degree of inflation bias in sticky-price models can depend on the order of actions within a period. If the central bank moves last, it takes the inflation rate as given and targets the markup, leading to a higher equilibrium inflation rate. We provide a simple static model to explain this mechanism.

Keywords: inflation (search for similar items in EconPapers)
Date: 2025
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