Heterogeneous response of disaggregate inflation to monetary policy regime change: The role of price stickiness

Autor:	Chi-Young Choi, Roisin O'Sullivan
Rok vydání:	2013
Předmět:	Macroeconomics Inflation Economics and Econometrics Control and Optimization Inflation targeting Applied Mathematics Headline inflation media_common.quotation_subject Monetary policy Monetary economics Relative price Shock (economics) Regime change Structural change Economics media_common
Zdroj:	Journal of Economic Dynamics and Control. 37:1814-1832
ISSN:	0165-1889
DOI:	10.1016/j.jedc.2013.04.001
Popis:	This paper explores how a monetary regime change affects headline inflation via differential effects on various sectors in the economy. Using disaggregated CPI data for Canada, we find that the response to the adoption of inflation targeting (IT) was quite heterogeneous across sectors. While sticky-price sectors experienced a notable change in inflation dynamics following IT adoption, little structural change was observed in flexible price sectors. Our analysis based on a common factor model suggests that the structural changes in the sticky price sectors are driven by a decline in their responses to common aggregate shocks, including a monetary shock.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_________::09649f6d858bca94a7d33e856d1b1b9a https://doi.org/10.1016/j.jedc.2013.04.001 Zobrazit plný text záznamu Full Text from ScienceDirect