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Inflation, Information Rigidity, and the Sticky Information Phillips Curve

Listed author(s):
  • Carrera, César

    (Banco Central de Reserva del Perú)

  • Ramírez-Rondán, Nelson

    (Banco Central de Reserva del Perú)

One of the most important structural relationships for policy makers is the Phillips curve; thus, this topic is the focus of ongoing theoretical and empirical research. We estimate the degree of information stickiness implied by the sticky information Phillips curve proposed by Mankiw and Reis (2002). Using threshold models we identify regimes of high and low inflation and find that each regime is associated with a specific degree of information stickiness. We find evidence that agents update information faster when inflation is higher.

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File URL: http://www.bcrp.gob.pe/docs/Publicaciones/Documentos-de-Trabajo/2013/documento-de-trabajo-17-2013.pdf
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Paper provided by Banco Central de Reserva del Perú in its series Working Papers with number 2013-017.

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Date of creation: Dec 2013
Handle: RePEc:rbp:wpaper:2013-017
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