Working Paper
When Inflation Persistence Really Matters: Two Examples
In this paper we present two examples where the presence of inflation persistence could influence the qualitative nature of monetary policy. In the first case the desirability of a monetary policy regime comes under question when extensive inflation persistence exists. In the second case the direction in which interest rates move following a cost push shock changes when inflation persistence becomes important. In both cases, inflation persistence is central to the process influencing policy.
Key Words
- inflation persistence
- Macroeconomic Stabilisation
- Makroökonomische Stabilisierung