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

Author(s): David Meenagh, Patrick Minford, Eric Nowell, Prakriti Sofat, Naveen Srinivasan
Publication Date: May 2008
Keyword(s): Inflation Persistence, Monetary Regime Shifts, New Classical, New Keynesian, Nominal Rigidity
JEL(s): E31, E37
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=6834

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.