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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

Abstract: 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)
Date: 2006
New Economics Papers: this item is included in nep-cba, nep-evo, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:eui:euiwps:eco2006/33

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