Inflation, information rigidity and the sticky information Phillips Curve

Available from: 
October 2013
Paper author(s): 
Cesar Carrera (Central Reserve Bank of Peru)
Nelson Ramirez-Rondan (Central Reserve Bank of Peru)
Macroeconomics - Economic growth - Monetary Policy

One of the most important structural relationships for policy makers is the Phillips curve; thus, there is active theoretical and empirical research on this topic. Mankiw and Reis’s (2002) proposal of sticky information about macroeconomic conditions has become an alternative to the sticky price modeling strategy. I estimate the degree of information updating implied by the sticky information Phillips curve for 12 OECD countries. These estimates are in line with the values in Mankiw and Reis (2002) and consistent with the significant effects of information rigidities for macroeconomic dynamics. I find suggestive evidence that the degree of information updating is higher when the inflation rate is higher or more volatile.


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Research section: 
Lacea 2013 annual meeting
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