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The Elusive Persistence: Wage and Price Rigidities, the Phillips Curve, and Inflation Dynamics

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  • Chris Tsoukis

    ()
    (London Metropolitan University)

  • George Kapetanios

    ()
    (Queen Mary, University of London)

  • Joseph Pearlman

    (London Metropolitan University)

Abstract

We review the main New Keynesian inflation equations that have arisen as a result of aggregation from individual firms' price rigidities. We find that, on the whole, they cannot account for inflation persistence, a key feature of the empirical dynamics of inflation, and with important policy implications. The only exception seems to be when price stickiness is combined with wage rigidity and staggering.

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File URL: http://www.econ.qmul.ac.uk/papers/doc/wp619.pdf
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Bibliographic Info

Paper provided by Queen Mary, University of London, School of Economics and Finance in its series Working Papers with number 619.

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Date of creation: Oct 2007
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Handle: RePEc:qmw:qmwecw:wp619

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Keywords: Inflation rigidity; Price stickiness; Phillips curve;

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Cited by:
  1. Tsoukis, Christopher & Tournemaine, Frederic, 2010. "Social conflict, growth and factor shares," MPRA Paper 23365, University Library of Munich, Germany, revised 20 Jun 2010.
  2. PETER McADAM & ALPO WILLMAN, 2013. "Technology, Utilization, and Inflation: What Drives the New Keynesian Phillips Curve?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 45(8), pages 1547-1579, December.

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