TITLE

INVESTIGATING INFLATION PERSISTENCE ACROSS MONETARY REGIMES

AUTHOR(S)
Benati, Luca
PUB. DATE
August 2008
SOURCE
Quarterly Journal of Economics;Aug2008, Vol. 123 Issue 3, p1005
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
Under inflation, targeting estimates of the indexation parameter in hybrid New Keynesian Phillips curves are either equal to zero, or very low, in the United Kingdom, Canada, Sweden, and New Zealand. Analogous results hold for the Euro area under the European Monetary Union, and for Switzerland under the new monetary regime: under stable regimes with clearly defined nominal anchors, inflation appears to be purely forward-looking. These results question the notion that the intrinsic inflation persistence found in post-WWII U.S. data is structural in the sense of Lucas (Carnegie-Rochester Conference Series on Public Policy, 1 [1976], 19-46), and suggest that "hardwiring" inflation persistence in macroeconomic models is potentially misleading.
ACCESSION #
33227875

 

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