When Inflation Persistence Really Matters: Two examples

Tatiana Kirsanova, David Vines and Simon Wren-Lewis

No 1351, Kiel Working Papers from Kiel Institute for the World Economy

Abstract: In this paper we present two examples where the presence of inflation persistence could influence the qualitative nature of monetary policy. In the first case the desirability of a monetary policy regime comes under question when extensive inflation persistence exists. In the second case the direction in which interest rates move following a cost push shock changes when inflation persistence becomes important. In both cases, inflation persistence is central to the process influencing policy.

Keywords: Inflation Persistence; Macroeconomic Stabilisation (search for similar items in EconPapers)
JEL-codes: E52 E61 E63 (search for similar items in EconPapers)
Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1351

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