Sticky Prices vs. Sticky Information: A Cross-Country Study of Inflation Dynamics
نویسندگان
چکیده
This paper compares sticky-price and sticky-information Phillips curves empirically considering inflation dynamics in eleven countries (the G7 and Scandinavia). We evaluate the models‘ abilities to match empirical second moments of inflation. Although overall model performance is similar, there is a strong systematic pattern in model performance by moment type. Sticky prices match unconditional moments of inflation dynamics clearly better while sticky information is considerably more successful in matching co-movements of inflation with demand.
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