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Are the facts of UK inflation persistence to be explained by nominal rigidity or changes in monetary regime?

  • David Meenagh

    (Cardiff University)

  • Patrick Minford

    (Cardiff University / CEPR)

  • Eric Nowell

    (University of Liverpool)

  • Prakriti Sofat

    (IDEAglobal (Singapore))

  • Naveen Srinivasan

    (Indira Gandhi Institute of Development Research)

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 and find that the varying persistence it reveals is largely due to changing monetary regimes and that models with moderate or even no nominal rigidity are best equipped to explain it.

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Paper provided by ESRC World Economy and Finance Research Programme, Birkbeck, University of London in its series WEF Working Papers with number 0028.

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Date of creation: Jul 2007
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Handle: RePEc:wef:wpaper:0028
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