New Keynesian models have been criticised on the grounds that they require implausibly large price shocks to explain inflation. Bils et al. (2012) show that, while these shocks are needed to reduce the excessive inflation persistence generated by the models, they give rise to unrealistically volatile reset price inflation. This paper shows that introducing heterogeneity in price stickiness in t...

This paper employs the recently developed structural stability tests with unknown break point and two median unbiased estimation methods to model China inflation persistence over the most recent quarter of a century. Our empirical results suggest that the persistence of both consumer price inflation and retail price inflation has witnessed declines over the most recent period of low inflation, ...

What is the seigniorage-maximizing level of inflation? Four models formulae for the seigniorage maximizing inflation rate (SMIR) are compared. Two sticky-price models arrive at very different quantitative recommendations although both predict somewhat lower SMIRs than Cagan’s formula and a variant of a .ex-price model due to Kimbrough (2006). The models differ markedly in how inflation distorts...

The historical record Figure 1 plots the price of oil relative to the core personal consumption expenditures price index (PCEPI) together with the core PCEPI inflation rate. (Core measures of inflation exclude food and energy prices.) The figure shows that the price of oil jumped sharply twice in the 1970s, as did inflation. But this relationship appears to have deteriorated over the latter par...

In this paper we investigate the relationship between price dispersion and inflation; we use weekly retail scanner data from 2009 to 2011 to measure price dispersion and inflation for several dairy products. We implement a linear model to investigate the linkage between price dispersion and consumer price indexes. As in the previous literature, we obtain mixed results with respect to the relati...

Abstract This paper revisits real-time forecasting of U.S. inflation based on Phillips curve-inspired linear regression models. Our innovation is to allow for both structural breaks in the regression parameters and the variance as well as uncertainty regarding which set of predictor variables one can include in these regressions (‘model uncertainty’). Structural breaks are described by occasion...

There have been two broad theories of inflation, namely the demand-pull theory of inflation (that is nowadays mainly the monetary theory of inflation) and the cost-push theory of inflation. The mainstream macroeconomics views inflation as a monetary phenomenon in the long run. Iran has experienced double-digit rates of inflation for about four decades. Our main aim is an explanation for the lon...

This paper examines the relationship between inflation and wage indexation in the postwar U.S. using data on the prevalence of cost-of-living adjustments in major collective bargaining agreements. I find that increases in inflation precede increases in wage indexation but reductions in inflation do not precede reductions in wage indexation. There is virtually no evidence that wage indexation af...