During the last decade, several studies have argued that sticky information model proposed by Mankiw and Reis (2002), in which firms update their information occasionally rather than instantaneously, explains some stylized facts about the inflation dynamics. Sticky information pricing model successfully captures the sluggish movement of aggregate prices in response to monetary policy shocks. De...

In this paper we measure the effect of the inflation tax on economic activity and welfare within a controlled setting. To do so, we develop a model of price posting and monetary exchange with inflation and finite populations. The model, which provides a game–theoretic foundation to Rocheteau and Wright (2005)'s competitive search monetary equilibrium, is used to derive theoretical propositions ...

In this paper, I consider the lessons recent academic research and historical experiences with monetary targeting and inflation targeting offer for the design of monetary policy regimes. The practical experiences with both monetary and inflation targeting suggest that successful policies have incorporated a great deal of flexibility. In principle, both monetary targeting and inflation targeting...

The world has endured a deep financial crisis and a great recession. Emerging markets are performing much better than they have in the past, especially in Latin America. The huge difference between the recent crisis and previous ones in emerging economies is that this time ‘it was not our fault’. The evidence from the emerging countries facing this unprecedented global downturn indicates that p...

a r t i c l e i n f o This paper constructs a quarterly series of GDP deflator inflation for China from 1979 to 2009 and tests for a structural break with an unknown change point in the dynamic inflation process. Empirical results suggest a significant structural change in inflation persistence. Employing a counterfactual simulation method, we show that the structural change is primarily attrib...

I thank Dr. Sesha Iyer and Dr. Pattnaik for the invitation to address this young audience. In monetary analysis and policy, inflation expectations play a pivotal role. Recently, in many advanced economies, central banks have substantially expanded their balance sheets, which is apparently inflationary. However, central banks in these countries allay the inflation concerns by indicating that, de...

This study sheds new light on the cross-sectional effects of inflation, which have substantial implications for stock valuation. I use financial statement analysis to examine systematic stockvaluation effects of aggregate price-level changes on individual companies, focusing on the implications for both researchers and investment practitioners. I develop inflation-adjustment procedures that are...