Inflation Dynamics and Inflation Regimes

摘要: In this paper we develop and estimate a new-Keynesian model of inflation use it to investigate the hypothesis that prices in UK are re-set more frequently during periods high inflation. model, firms assumed condition their expectations on an optimally-selected but incomplete information set further assume probability they will reset price any quarter depends upon prevailing inflationary regime. The implies complex dynamics than conventional models predict. We find cannot reject formal restrictions implied by (using quarterly data) mean time before were was around eight months 'high' regime approximately two years when 'low'.