Working Paper

Inflation persistence

Abstract: This paper examines the concept of inflation persistence in macroeconomic theory. It begins with a definition of persistence, emphasizing the difference between reduced-form and structural persistence. It then examines a number of empirical measures of reduced-form persistence, considering the possibility that persistence may have changed over time. The paper then examines the theoretical sources of persistence, distinguishing ?intrinsic? from ?inherited? persistence, and deriving a number of analytical results on persistence. It summarizes the implications for persistence from the literatures on ?sticky-information? models, learning models, and so-called ?trend inflation models,? providing some new results throughout.

Keywords: Inflation (Finance); Phillips curve;

Bibliographic Information

Provider: Federal Reserve Bank of Boston

Part of Series: Working Papers

Publication Date: 2009

Number: 09-14