Working Paper: CEPR ID: DP6834
Authors: David Meenagh; Patrick Minford; Eric Nowell; Prakriti Sofat; Naveen Srinivasan
Abstract: It has been widely argued that inflation persistence since WWII has been widespread and durable and that it can only be accounted for by models with a high degree of nominal rigidity. We examine UK post-war data where after confirming previous studies? findings of varying persistence due to changing monetary regimes, we find that models with little nominal rigidity are best equipped to explain it.
Keywords: inflation persistence; monetary regime shifts; new classical; new keynesian; nominal rigidity
JEL Codes: E31; E37
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| nominal rigidity (D10) | inflation persistence (E31) |
| monetary regimes (E42) | inflation persistence (E31) |
| Bretton Woods period (F33) | inflation persistence (E31) |
| floating exchange rate regime (F33) | inflation persistence (E31) |
| high nominal rigidity (E62) | inflation persistence (E31) |
| minimal nominal rigidity (D10) | inflation persistence (E31) |
| interaction of monetary policy and autoregressiveness (E19) | inflation persistence (E31) |