In this paper, we characterize conditions under which interest rate feedback rules wherby the nominal interest rate is set as an increasing function of the inflation rate generate multiple equilibria. We show that these conditions depend not only on the fiscal regime (as emphasized in the fiscal...

In the case of the consumer price index the importance of a seasonally adjusted measure lies in the possibility of promptly identifying turning points in inflation. The focus of this paper is the so-called "cost-of-living" index, the most used measure of Italian inflation. Our aim is to identify...

Recent literature reaches contrasting conclusions on the ability of price/wage staggering models to generate output persistence. The authors derive fairly general results from a stylised log-linear model which encompasses most of the microfound model of price/wage staggering.

A fresh interpretaion is provided of the influential finding that the markup of prices over marginal costs is counter-cyclical. Using Rotemberg and Woodford's data set we argue that the markup is best modelled as a variable that is integrated of order one. A consequence of this finding is that...

An I(2) analysis of inflation and the markup is undertaken for the G7 economies and Australia. We find that the levels of prices and costs are best described as I(2) processes and that except for Japan a linear combination of the log levels or prices and costs cointegrate to the markup that is...

We present a model in which inflation has a systematic effect on relative prices and welfare. The model focuces on the microeconomics of trade under inflation, and in particular, the role of long-term trading relationships in markets characterized by imperfect information.