Inflation, Information Rigidity, and the Sticky Information Phillips Curve

Cesar Carrera and Nelson R. Ramírez-Rondán

No 1, Working Papers from Peruvian Economic Association

Abstract: The Great Moderation is characterized for being a stable period in terms of macroeconomic conditions, specially in inflation. In terms of the sticky information theory, this environment may provide few incentives for agents to update information on inflation and then a new slope of the sticky information Phillips curve should be observed. We estimate the degree of information rigidity implied by the sticky information Phillips curve proposed by Mankiw and Reis (2002). Using threshold models we identify regimes of high and low inflation and find that each regime is associated with a specific degree of information stickiness. We find evidence that agents update information faster when inflation is higher.

Keywords: Inflation; Sticky Information; Phillips Curve; Threshold model (search for similar items in EconPapers)
JEL-codes: C22 C26 E31 E52 (search for similar items in EconPapers)
Date: 2014-01
New Economics Papers: this item is included in nep-mac and nep-sog
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: INFLATION, INFORMATION RIGIDITY, AND THE STICKY INFORMATION PHILLIPS CURVE (2019)
Working Paper: Inflation, Information Rigidity, and the Sticky Information Phillips Curve (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:apc:wpaper:2014-001

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