Despite widespread recognition that credibility is an important determinant of inflation persistence, surprisingly little empirical evidence exists to support this hypothesis. We investigate this hypothesis using data for US and UK. Our results suggest that the degree of inflation persistence is...

In this paper, we analyze firms' pricing behavior using a full informative micro dataset that accounts for a large part of Italian firms. In our view, “the black boxes†to examine are the relations between price setting, market structure and spatial disparities. A first goal of the...

This paper investigates how the gains from commitment are large when inflation persistence and data uncertainty coexist. We consider two types of data uncertainty: measurement errors of potential output and inflation. We show that under a situation where data uncertainty exists, there are large...