Working Paper

When Inflation Persistence Really Matters: Two Examples


  • Kirsanova
  • T.
  • Vines
  • D.
  • Wren-Lewis
  • S.
Publication Date

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.


JEL Classification
E52, E61, E63

Key Words

  • inflation persistence
  • Macroeconomic Stabilisation
  • Makroökonomische Stabilisierung