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New Evidence on Inflation Persistence and Price Stickiness in the Euro Area: Implications for Macro Modelling

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  • Ignazio Angeloni
  • Luc Aucremanne
  • Michael Ehrmann
  • Jordi Galí
  • Andrew Levin
  • Frank Smets

Abstract

This paper evaluates new evidence on price setting practices and inflation persistence in the euro area with respect to its implications for macro modelling. It argues that several of the most commonly used assumptions in micro-founded macro models are seriously challenged by the new findings.

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Bibliographic Info

Paper provided by Barcelona Graduate School of Economics in its series Working Papers with number 242.

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Date of creation: Sep 2005
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Handle: RePEc:bge:wpaper:242

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  1. Gali, Jordi & Gertler, Mark, 1999. "Inflation dynamics: A structural econometric analysis," Journal of Monetary Economics, Elsevier, Elsevier, vol. 44(2), pages 195-222, October.
  2. Ehrmann, Michael & Smets, Frank, 2003. "Uncertain potential output: implications for monetary policy," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 27(9), pages 1611-1638, July.
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  9. Trabandt, Mathias, 2007. "Sticky Information vs. Sticky Prices: A Horse Race in a DSGE Framework," Working Paper Series, Sveriges Riksbank (Central Bank of Sweden) 209, Sveriges Riksbank (Central Bank of Sweden).
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  15. Athanasios Orphanides & John Williams, 2004. "Imperfect Knowledge, Inflation Expectations, and Monetary Policy," NBER Chapters, National Bureau of Economic Research, Inc, in: The Inflation-Targeting Debate, pages 201-246 National Bureau of Economic Research, Inc.
  16. Filippo Altissimo & Laurent Bilke & Andrew Levin & Thomas Mathä & Benoit Mojon, 2006. "Sectoral and Aggregate Inflation Dynamics in the Euro Area," Journal of the European Economic Association, MIT Press, MIT Press, vol. 4(2-3), pages 585-593, 04-05.
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  23. Luis J. Álvarez & Pablo Burriel & Ignacio Hernando, 2005. "Do decreasing hazard functions for price changes make any sense?," Banco de Espa�a Working Papers, Banco de Espa�a 0508, Banco de Espa�a.
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  29. Rotemberg, Julio J, 1982. "Monopolistic Price Adjustment and Aggregate Output," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 49(4), pages 517-31, October.
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