WP 2013-17: Inflation, Information Rigidity, and the Sticky Information Phillips Curve
WP 2013-17: Inflation, Information Rigidity, and the Sticky Information Phillips Curve
WP 2013-17: Inflation, Information Rigidity, and the Sticky Information Phillips Curve
N°
WP 2013-17
Title
Inflation, Information Rigidity, and the Sticky Information Phillips Curve
Author(s)
César Carrera and Nelson Ramírez-Rondán
Language
English
Date
2013/12/31
Abstract
One of the most important structural relationships for policy makers is the Phillips curve; thus, this topic is the focus of ongoing theoretical and empirical research. We estimate the degree of information stickiness 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.