Inflation persistence and relative contracting
By: John C. Driscoll and Steinar Holden.
Contributors: Holden, Steinar.
Series: Finance and economics discussion series ;; 2003-29; Finance and economics discussion series (Online) ;; 2003-29.
Publisher: Federal Reserve Board
Published: 2003
Place of publication: Washington, D.C
Language: eng
Format: Electronic resource
Subjects: Phillips curve.; Inflation (Finance) -- Mathematical models.
Description: "Macroeconomists have for some time been aware that the New Keynesian Phillips curve, though highly popular in the literature, cannot explain the persistence observed in actual inflation.  We argue that one of the more prominent alternative formulations, the Fuhrer and Moore (1995) relative contracting model, is highly problematic.  Fuhrer and Moore's 1995 formulation generates inflation persistence, but this is a consequence of their assuming that workers care about the past real wages of other workers.  Making the more reasonable assumption that workers care about the current real wages of other workers, one obtains the standard formulation with no inflation persistence"--Federal Reserve Board web site.
Notes: Includes bibliographical references.
Title from PDF file as viewed on 7/26/2004.
Also available in print.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.