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Are the facts of UK inflation persistence to be explained by nominal rigidity or changes in monetary regime?

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Author Info
Meenagh, David () (Cardiff Business School)
Minford, Patrick () (Cardiff Business School)
Nowell, Eric
Sofat, Prakriti
Srinivasan, Naveen

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Abstract

It has been widely argued that inflation persistence since WWII has been widespread and durable and that it can only be accounted for by models with a high degree of nominal rigidity. We examine UK post-war data and find that the varying persistence it reveals is largely due to changing monetary regimes and that models with moderate or even no nominal rigidity are best equipped to explain it.

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Paper provided by Cardiff University, Cardiff Business School, Economics Section in its series Cardiff Economics Working Papers with number E2007/21.

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Length: 18 pages
Date of creation: Jul 2007
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Handle: RePEc:cdf:wpaper:2007/21

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Related research
Keywords: Inflation Persistence New Keynesian New Classical Nominal Rigidity Monetary Regime Shifts

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Find related papers by JEL classification:
E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation

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