A Note on Intrinsic Inflation Persistence and the Optimal Inflation Rate

Dario Pontiggia ()

Journal of Reviews on Global Economics, 2016, vol. 5, 248-253

Abstract: This paper examines the implications of intrinsic inflation persistence, namely inertia that inflation inherits from its own past, on the conduct of optimal monetary policy. We study the optimal long-run rate of inflation in a basic New Keynesian model, which is augmented for intrinsic inflation persistence. We show that the commitment solution for the monetary authority leads to steady-state outcomes in which inflation is positive.

Keywords: Optimal monetary policy; Phillips curve; inflation persistence. (search for similar items in EconPapers)
JEL-codes: E31 E32 E52 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:lif:jrgelg:v:5:y:2016:p:248-253

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