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2011-02-17Buch DOI: 10.18452/4298
Monetary Policy, Trend Inflation and Inflation Persistence
dc.contributor.authorYao, Fang
dc.date.accessioned2017-06-16T00:17:35Z
dc.date.available2017-06-16T00:17:35Z
dc.date.created2011-04-15
dc.date.issued2011-02-17
dc.date.submitted2011-02-17
dc.identifier.issn1860-5664
dc.identifier.urihttp://edoc.hu-berlin.de/18452/4950
dc.description.abstractThis paper presents a new mechanism through which monetary policy rules affect inflation persistence. When assuming that price reset hazard functions are not constant, backward- looking dynamics emerge in the NKPC. This new mechanism makes the traditional demand channel of monetary transmission have a long-lasting effect on inflation dynamics. The Calvo model fails to convey this insight, because its constant hazard function leads those important backward-looking dynamics to be canceled out. I first analytically show how it works in a simple setup, and then solve a log-linearized model numerically around positive trend inflation. With realistic calibration of trend inflation and the monetary policy rule, the model can account for the pattern of changes in inflation persistence observed in the post-wwii U.S. data. In addition, with increasing hazard functions, the "Taylor principle" is sufficient to guarantee the determinate equilibrium even under extremely high trend inflation.eng
dc.language.isoeng
dc.publisherHumboldt-Universität zu Berlin, Wirtschaftswissenschaftliche Fakultät
dc.subjectNew Keynesian Phillips curveeng
dc.subjectHazard functioneng
dc.subjectTrend inflationeng
dc.subjectIntrinsic inflation persistenceeng
dc.subjectMonetary policyeng
dc.subject.ddc330 Wirtschaft
dc.titleMonetary Policy, Trend Inflation and Inflation Persistence
dc.typebook
dc.identifier.urnurn:nbn:de:kobv:11-100185745
dc.identifier.doihttp://dx.doi.org/10.18452/4298
local.edoc.container-titleSonderforschungsbereich 649: Ökonomisches Risiko
local.edoc.pages22
local.edoc.type-nameBuch
local.edoc.container-typeseries
local.edoc.container-type-nameSchriftenreihe
local.edoc.container-volume2011
local.edoc.container-issue8
local.edoc.container-year2011
local.edoc.container-erstkatid2195055-6

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