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Inflation Persistence: Does Credibility of the Monetary Regime Matter?

Author

Listed:
  • Naveen Srinivasan

    () (Indira Gandhi Institute of Development Research)

  • Pankaj Kumar

    () (Indira Gandhi Institute of Development Research & Reserve Bank of India)

Abstract

Despite widespread recognition that credibility is an important determinant of inflation persistence, surprisingly little empirical evidence exists to support this hypothesis. We investigate this hypothesis using data for US and UK. Our results suggest that the degree of inflation persistence is strongly influenced by regime credibility.

Suggested Citation

  • Naveen Srinivasan & Pankaj Kumar, 2012. "Inflation Persistence: Does Credibility of the Monetary Regime Matter?," Economics Bulletin, AccessEcon, vol. 32(4), pages 2944-2954.
  • Handle: RePEc:ebl:ecbull:eb-12-00590
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    File URL: http://www.accessecon.com/Pubs/EB/2012/Volume32/EB-12-V32-I4-P283.pdf
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    References listed on IDEAS

    as
    1. Meenagh, David & Minford, Patrick & Nowell, Eric & Sofat, Prakriti & Srinivasan, Naveen, 2009. "Can the facts of UK inflation persistence be explained by nominal rigidity?," Economic Modelling, Elsevier, vol. 26(5), pages 978-992, September.
    2. Westelius, Niklas J., 2005. "Discretionary monetary policy and inflation persistence," Journal of Monetary Economics, Elsevier, vol. 52(2), pages 477-496, March.
    3. Fan, Jingwen & Minford, Patrick, 2009. "Can the Fiscal Theory of the price level explain UK inflation in the 1970s?," Cardiff Economics Working Papers E2009/26, Cardiff University, Cardiff Business School, Economics Section, revised Mar 2011.
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    Citations

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    Cited by:

    1. Valera, Harold Glenn A. & Holmes, Mark J. & Hassan, Gazi M., 2017. "How credible is inflation targeting in Asia? A quantile unit root perspective," Economic Modelling, Elsevier, vol. 60(C), pages 194-210.
    2. Andrew Phiri, 2016. "Inflation persistence in African countries: Does inflation targeting matter?," Economics and Business Letters, Oviedo University Press, vol. 5(3), pages 65-71.

    More about this item

    Keywords

    Inflation Persistence; Credibility; Kalman Filter;

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles

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