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Can the Facts of UK Inflation Persistence be Explained by Nominal Rigidity?

It has been widely argued that inflation persistence since WWII has been widespread and durable and that it can only be accounted for by models with a high degree of nominal rigidity. We examine UK post-war data where after confirming previous studies, findings of varying persistence due to changing monetary regimes, we find that models with little nominal rigidity are best equipped to explain it.

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Paper provided by Cardiff University, Cardiff Business School, Economics Section in its series Cardiff Economics Working Papers with number E2008/7.

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Length: 21 pages
Date of creation: Apr 2008
Date of revision: Apr 2010
Publication status: Published in Economic Modelling , vol. 26(5) (2009), 978-992
Handle: RePEc:cdf:wpaper:2008/7
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