Albanesi, Stefania; Chari, V. V.; Christiano, Lawrence J. - Federal Reserve Bank of Minneapolis - 2003
Why is inflation persistently high in some periods and low in others? The reason may be absence of commitment in … trigger strategies. In these traps, expectations of high or low inflation lead the public to take defensive actions, which … inflation rate is low on average. This analysis suggests that institutions which promote commitment can prevent high inflation …