Working Papers - details - WEF0028
WEF0028
Are the facts of UK inflation persistence to be explained by nominal rigidity or changes in monetary regime?
David Meenagh, Patrick Minford, Eric Nowell, Prakriti Sofat, Naveen Srinivasan
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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.
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