I develop an extension of the standard New Keynesian model to monetary policy regime switching to study the impact of uncertainty around the future inflation target. First, I fully characterize how the responses of current inflation and output to inflation target uncertainty depend on the monetary policy rule. If monetary policy is passive, inflation may increase far beyond the anticipated incr...

In this paper we develop and estimate a new-Keynesian model of inflation and use it to investigate the hypothesis that prices in the UK are re-set more frequently during periods of high inflation. In the model, firms are assumed to condition their expectations on an optimally-selected but incomplete information set and we further assume that the probability that they will reset their price in a...

The basic workings of inflationary models are summarized, along with the arguments that strongly suggest that our universe is the product of inflation. I describe the quantum origin of density perturbations, giving a heuristic derivation of the scale invariance of the spectrum and the leading corrections to scale invariance. The mechanisms that lead to eternal inflation in both new and chaotic ...

A growing theoretical literature describes mechanisms whereby even predictable increases in the rate of inflation interfere with the ability of the financial sector to allocate resources effectively. This paper empirically assesses these predictions. The evidence indicates that there is a significant, and economically important, negative relationship between inflation and both banking sector de...

Since the introduction of inflation targeting, inflation expectations have become firmly anchored at target and there has been a flattening of the Phillips curve. These changes mean that a “divine coincidence” between headline inflation and output-gap stabilization is less apparent than when inflation targeting was introduced. This has led some to call for a fundamental reengineering of inflati...

In a passive monetary and active fiscal policy regime, changes in the value of public debt generate wealth effects on households. Then, in contrast to the active monetary and passive fiscal policy regime, inflation moves oppositely from the inflation target and a stronger reaction of interest rates to inflation increases the response of inflation to shocks. Moreover, a higher level of public de...

Modern theories of inflation incorporate a vertical long-run Phillips curve and are usually estimated using techniques that ignore the non-stationary behaviour of inflation. Consequently, the estimates obtained are imprecise and are unable to distinguish between competing models of inflation and test the veracity of a vertical long-run Phillips curve. We estimate a Phillips curve model taking i...

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, ...

This article examines public opinion in advanced economies to assess what the general public thinks about inflation. Are individual citizens concerned about inflation? How important a public policy issue do they think it is? What influences their opinions about inflation? Does opinion about inflation vary across countries and, if so, what accounts for this variation? The opinion surveys examine...

Recently, a model of inflation using non-minimally coupled massive vector fields has been proposed. For a particular choice of non-minimal coupling parameter and for a flat FRW model, the model is reduced to the model of chaotic inflation with massive scalar field. We study the effect of non-zero curvature of the universe on the onset of vector inflation. We find that in a curved universe the d...