An evolutionary theory of inflation inertia

Alexis Anagnostopoulos; Omar Licandro; Italo Bove; Karl Schlag

doi:10.1162/jeea.2007.5.2-3.433

An evolutionary theory of inflation inertia

Alexis Anagnostopoulos
, Omar Licandro
, Italo Bove
, Karl Schlag

Economics

European University Institute, San Domenico di Fiesole
Universidad de la República

Research output: Contribution to journal › Article › peer-review

3 Scopus citations

Abstract

We provide a simple theory of inflation inertia in a staggered price setting framework à la Calvo (1983). Contrary to Calvo's formulation, the frequency of price changes is allowed to vary according to an evolutionary criterion. Inertia is the direct result of gradual adjustment in this frequency following a permanent change in the rate of money growth.

Original language	English
Pages (from-to)	433-443
Number of pages	11
Journal	Journal of the European Economic Association
Volume	5
Issue number	2-3
DOIs	https://doi.org/10.1162/jeea.2007.5.2-3.433
State	Published - Apr 2007

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10.1162/jeea.2007.5.2-3.433

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title = "An evolutionary theory of inflation inertia",

abstract = "We provide a simple theory of inflation inertia in a staggered price setting framework {\`a} la Calvo (1983). Contrary to Calvo's formulation, the frequency of price changes is allowed to vary according to an evolutionary criterion. Inertia is the direct result of gradual adjustment in this frequency following a permanent change in the rate of money growth.",

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AU - Licandro, Omar

AU - Bove, Italo

AU - Schlag, Karl

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AB - We provide a simple theory of inflation inertia in a staggered price setting framework à la Calvo (1983). Contrary to Calvo's formulation, the frequency of price changes is allowed to vary according to an evolutionary criterion. Inertia is the direct result of gradual adjustment in this frequency following a permanent change in the rate of money growth.

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DO - 10.1162/jeea.2007.5.2-3.433

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An evolutionary theory of inflation inertia

Abstract

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