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Staggered Price and Trend Inflation:Some Nuisances

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  • Ascari, Guido

    (University of Pavia)

Abstract

Most of the papers in the sticky-price literature are based on a log-linearisation around the zero inflation steady state, a simplifying but counterfactual assumption. This paper shows that when trend inflation is considered, both\ the long-run and the short run properties of time dependent staggered price models change dramatically. It follows that the results obtained by models log-linearised around a zero inflation steady state might be misleading.

Suggested Citation

  • Ascari, Guido, 2002. "Staggered Price and Trend Inflation:Some Nuisances," Royal Economic Society Annual Conference 2002 10, Royal Economic Society.
    • Handle: RePEc:ecj:ac2002:10
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    References listed on IDEAS

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    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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