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The Elusive Persistence: Wage and Price Rigidities, the Phillips Curve, and Inflation Dynamics

Author

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  • Chris Tsoukis

    (London Metropolitan University)

  • George Kapetanios

    (Queen Mary, University of London)

  • Joseph Pearlman

    (London Metropolitan University)

Abstract

We review the main New Keynesian inflation equations that have arisen as a result of aggregation from individual firms' price rigidities. We find that, on the whole, they cannot account for inflation persistence, a key feature of the empirical dynamics of inflation, and with important policy implications. The only exception seems to be when price stickiness is combined with wage rigidity and staggering.

Suggested Citation

  • Chris Tsoukis & George Kapetanios & Joseph Pearlman, 2007. "The Elusive Persistence: Wage and Price Rigidities, the Phillips Curve, and Inflation Dynamics," Working Papers 619, Queen Mary University of London, School of Economics and Finance.
    • Handle: RePEc:qmw:qmwecw:619
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    File URL: https://www.qmul.ac.uk/sef/media/econ/research/workingpapers/2007/items/wp619.pdf
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    More about this item

    Keywords

    Inflation rigidity; Price stickiness; Phillips curve;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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