DP6834 | Can the Facts of UK Inflation Persistence be Explained by Nominal Rigidity?

Publication Date

27/05/2008

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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.