explain how short price durations can nevertheless generate a large degree of aggregate inflation persistence. We empirically … inflation persistence. The final good is produced through a chain of intermediate goods, which undergo several processing stages … pricing contracts within the standard Calvo pricing mechanism are compatible with large inflation persistence, and inflation …

. Under discretionary monetary policy the size of the inflation bias depends on the fiscal policy regime. Using the timeless … alternative fiscal policy rules, and inflation and output persistence reflects the economic data. With the deficit rules, the …

response of wages to high unemployment can pose adjustment problems. We address the issue using extensive simulations of an …, unique equilibrium unemployment rate but with relatively slow convergence dynamics. The interaction between unemployment … deterministic and stochastic simulations. Resulting impulse-responses are analysed, as well as the distribution of unemployment …

contribute much to aggregate fluctuations. Capital gains taxes are important when there are persistent changes in the inflation … rate. Money growth shocks do not cause persistence changes in inflation when the central bank uses a money growth rule … inflation, raising both the nominal value of capital and the effective marginal capital gains tax rate. …

inflation but also on the measure of inflation included in the rule and on whether the flexible-price good and the sticky …-price good are Edgeworth complements, substitutes or utility separable. We consider three possible measures of inflation: the … flexible-price inflation, the sticky price inflation and the core inflation; and we analyze three different types of rules: a …