An Evolutionary Theory of Inflation Inertia
Alexis Anagnostopoulos (),
Omar Licandro (),
Italo Bove and
Karl Schlag ()
No ECO2006/33, Economics Working Papers from European University Institute
We provide a simple theory of inflation inertia in a staggered price setting framework a la Calvo (1983). Contrary to Calvo's formulation, the frequency of price changes is allowed to vary according to an evolutionary criterion. Inertia is the direct result of gradual adjustment in this frequency following a permanent change in the rate of money growth.
Keywords: Inflation inertia; evolutionary game theory; staggered price setting (search for similar items in EconPapers)
JEL-codes: E31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-evo, nep-mac and nep-mon
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Journal Article: An Evolutionary Theory of Inflation Inertia (2007)
Working Paper: An Evolutionary Theory of Inflation Inertia (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:eui:euiwps:eco2006/33
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