Series: IMF Working Papers
Author(s): Guillermo Calvo , Michael Kumhof , and Oya Celasun
Publisher: INTERNATIONAL MONETARY FUND
Publication Date: 01 February 2002
Keywords: Inflation inertia, staggered pricing, exchange rate based stabilization, inflation rate, monetary economics, relative price, Open Economy Macroeconomics,
This paper develops a theory of inflation inertia based on forward looking staggered price setting in the nontradable goods sector of a small open economy. Unlike current theories of sticky prices, transitions to a...