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Inflation persistence

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  • Jeffrey C. Fuhrer

Abstract

This paper examines the concept of inflation persistence in macroeconomic theory. It begins with a definition of persistence, emphasizing the difference between reduced-form and structural persistence. It then examines a number of empirical measures of reduced-form persistence, considering the possibility that persistence may have changed over time. The paper then examines the theoretical sources of persistence, distinguishing ?intrinsic? from ?inherited? persistence, and deriving a number of analytical results on persistence. It summarizes the implications for persistence from the literatures on ?sticky-information? models, learning models, and so-called ?trend inflation models,? providing some new results throughout.

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  • Jeffrey C. Fuhrer, 2009. "Inflation persistence," Working Papers 09-14, Federal Reserve Bank of Boston.
    • Handle: RePEc:fip:fedbwp:09-14
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    Keywords

    Inflation (Finance); Phillips curve;

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    • E0 - Macroeconomics and Monetary Economics - - General

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