Non-constant Hazard Function and Inflation Dynamics
نویسنده
چکیده
This paper explores implications of nominal rigidity characterized by a non-constant hazard function for aggregate dynamics. I derive the NKPC under an arbitrary hazard function and parameterize it with the Weibull duration model. The resulting Phillips curve involves lagged ination and lagged expectations. It nests the Calvo NKPC as a limiting case in the sense that the e¤ects of both terms are canceled out under the constant-hazard assumption. Furthermore, I nd lagged ination always has negative coe¢ cients, thereby making it impossible to interpret ination persistence as intrinsic. The numerical evaluation shows that the increasing hazard function leads to hump-shaped impulse responses of ination to monetary shocks, and output leads ination. JEL classi cation: E12; E31
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