Are the Facts of UK Inflation Persistence to Be Explained by Nominal Rigidity or Changes in Monetary Regime?

WEF Working Paper No. 0028

37 Pages Posted: 2 Nov 2007

See all articles by David Meenagh

David Meenagh

Cardiff University Business School

Patrick Minford

Cardiff University Business School; Centre for Economic Policy Research (CEPR)

Eric Nowell

University of Liverpool Management School (ULMS) - Economics Division

Prakriti Sofat

Cardiff University Business School

Naveen Srinivasan

Cardiff University Business School

Date Written: July 2007

Abstract

It has been widely argued that inflation persistence since WWII has been widespread and durable and that it can only be accounted for by models with a high degree of nominal rigidity. We examine UK post-war data and find that the varying persistence it reveals is largely due to changing monetary regimes and that models with moderate or even no nominal rigidity are best equipped to explain it.

Keywords: inlfation persistence, New Keynesian, New Classical, nominal rigidity, monetary regime shifts

JEL Classification: E31, E37

Suggested Citation

Meenagh, David and Minford, Patrick and Nowell, Eric and Sofat, Prakriti and Srinivasan, Naveen K., Are the Facts of UK Inflation Persistence to Be Explained by Nominal Rigidity or Changes in Monetary Regime? (July 2007). Available at SSRN: https://ssrn.com/abstract=1026337 or http://dx.doi.org/10.2139/ssrn.1026337

David Meenagh (Contact Author)

Cardiff University Business School ( email )

Aberconway Building
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Cardiff, CF10 3EU
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+44 29 2087 5198 (Phone)
+44 29 2087 4419 (Fax)

Patrick Minford

Cardiff University Business School ( email )

Aberconway Building
Colum Drive
Cardiff, CF10 3EU
United Kingdom
+44 29 2087 5728 (Phone)
+44 29 2087 4419 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Eric Nowell

University of Liverpool Management School (ULMS) - Economics Division ( email )

Eleanor Rathbone Building
Bedford Street North
Liverpool L69 7ZA
United Kingdom
+44 15 1794 3058 (Phone)
+44 15 1794 3032 (Fax)

Prakriti Sofat

Cardiff University Business School ( email )

Aberconway Building
Colum Drive
Cardiff, CF10 3EU
United Kingdom

Naveen K. Srinivasan

Cardiff University Business School ( email )

Colum Drive
Aberconway Building
Cardiff CF10 3EU
United Kingdom
+44 029 2087 6545 (Phone)
+44 029 2087 4419 (Fax)

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