Working Paper

When Inflation Persistence Really Matters: Two Examples

Authors

  • Tatiana Kirsanova
  • David Vines
  • Simon Wren-Lewis
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.

Info

JEL Classification
E52, E61, E63

Key Words

  • inflation persistence
  • Macroeconomic Stabilisation
  • Makroökonomische Stabilisierung