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Optimising Microfoundations for Inflation Persistence Author info | Abstract | Publisher info | Download info | Related research | Statistics Richard Mash
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Much recent monetary policy literature has searched for structural models suitable for policy analysis that are both based on optimising microfoundations and consistent with the data, especially observed persistence in inflation and output. Few models do well on both criteria. We derive an optimising model of the Phillips curve based on a generalised time dependent pricing rule, calibrate it using microeconomic evidence on price changing behaviour and simulate it with a standard discretionary policy maker. The model predicts inflation and output persistence comparable to that observed without reliance on rule of thumb behaviour or serially correlated shock processes.
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Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number
183.
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Date of creation: 2004Date of revision:
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Keywords: Monetary Policy Phillips Curve Inflation Persistence Microfoundations Other versions of this item:
Find related papers by JEL classification: E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
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references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
Richard Mash, 2005.
"Simple Pricing Rules, the Phillips Curve and the Microfoundations of Inflation Persistence ,"
Computing in Economics and Finance 2005
427, Society for Computational Economics.
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"Bayesian Estimation of an Open Economy DSGE Model with Incomplete Pass-Through ,"
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179, Sveriges Riksbank (Central Bank of Sweden).
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Adolfson, Malin & Laseen, Stefan & Linde, Jesper & Villani, Mattias, 2007.
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Journal of International Economics ,
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Luc Aucremanne & Emmanuel Dhyne, 2005.
"Time-dependent versus State-dependent Pricing: A Panel Data Approach to the Determinants of Belgian Consumer Price Changes ,"
Research series
200504-1, National Bank of Belgium.
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Richard Mash, 2003.
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Economics Series Working Papers
173, University of Oxford, Department of Economics.
[Downloadable!]
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