TY  - BOOK
AU  - Calvo,Guillermo
AU  - Celasun,Oya
AU  - Kumhof,Michael
TI  - Nominal Exchange Rate Anchoring Under Inflation Inertia
T2  - IMF Working Papers; Working Paper
SN  - 1451844921 :
SN  - 1018-5941
PY  - 2002///
CY  - Washington, D.C.
PB  - International Monetary Fund
KW  - Exchange Rate Based Stabilization
KW  - imf
KW  - Inflation Inertia
KW  - Inflation Rate
KW  - Monetary Economics
KW  - Open Economy Macroeconomics
KW  - Relative Price
KW  - Chile
KW  - Mexico
N2  - 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 lower steady state inflation rate take time even if they are fully credible, and they are associated with significant output losses in nontradables There is a welfare trade-off between these output losses and the gains from smaller inflationary distortions. Gains exceed losses for most calibrations. The optimal steady state is the Friedman rule
UR  - http://elibrary.imf.org/view/IMF001/04959-9781451844924/04959-9781451844924/04959-9781451844924.xml
UR  - http://www.imfbookstore.org/IMFORG/9781451844924
ER  -