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Inflation Persistence
Abstract
This paper demonstrates that the behavior of the conventional Phelps-Taylor model of overlapping wage contracts stands in stark contrast with important features of U. S. macro data for inflation and output. In particular, the Phelps-Taylor specification implies far too little inflation persistence. We present a new contracting model, in which agents are concerned with relative real wages, that is data-consistent. In a specification that nests both models, we resoundingly reject the conventional contracting model, but cannot reject the new contracting model.
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Citations
Cited by
Nominal Rigidities and the Dynamic Effects of a Shock to Monetary Policy
Christiano, L. J., Eichenbaum, M., & Evans, C. L. (2005) · Journal of Political Economy · doi:10.1086/426038 · Cited by 6,238
The Science of Monetary Policy: A New Keynesian Perspective
Clarida, R., Galí, J., & Gertler, M. (1999) · Journal of Economic Literature · doi:10.1257/jel.37.4.1661 · Cited by 4,916
Estimation and Inference of Impulse Responses by Local Projections
Jordà, Ò. (2005) · American Economic Review · doi:10.1257/0002828053828518 · Cited by 4,677
Some Evidence on the Importance of Sticky Prices
Bils, M., & Klenow, P. J. (2004) · Journal of Political Economy · doi:10.1086/422559 · Cited by 1,540
Sticky Information Versus Sticky Prices: A Proposal to Replace the New Keynesian Phillips Curve
Mankiw, N. G. G., & Reis, R. A. M. R. (2001) · SSRN Electronic Journal · doi:10.2139/ssrn.268692 · Cited by 688
Metadata
- Authors
- Fuhrer, J., & Moore, G.
- Venue
- The Quarterly Journal of Economics
- Publisher
- Oxford University Press (OUP)
- Published
- 1995-02-01
- Volume
- 110
- Issue
- 1
- Pages
- 127-159
- ISSN
- 0033-5533 (ISSN-L)
- 1531-4650
- OpenAlex
- W4210365901
- Cited by
- 875
- References
- 0
- FWCI
- 22.66
- Type
- journal article
- Language
- en
- Open access
- closed
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- Fuhrer, J., & Moore, G. (1995). Inflation Persistence. The Quarterly Journal of Economics. https://doi.org/10.2307/2118513
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Bibliographic data: Semantic Scholar, OpenAlex, Crossref.
Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
