Inflation persistence and flexible prices

Preprint OPEN
Robert Dittmar; William T. Gavin; Finn E. Kydland;
  • Subject: Inflation (Finance) ; Econometric models ; Taylor's rule
    arxiv: General Relativity and Quantum Cosmology

If the central bank follows an interest rate rule, then inflation is likely to be persistence, even when prices are fully flexible. Any shock, whether persistent or not, may lead to inflation persistence. In equilibrium, the dynamics of inflation are determined by the e... View more
  • References (25)
    25 references, page 1 of 3

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