Price and wage inflation persistence across countries and monetary regimes

We augmented a macro-model with intrinsic-inflation inertia assuming that prices farer in the past are more likely to be reset. We estimated the model for seven industrialized economies to compare their price/wage structures and to explore the potential nexus between changes the price/wage structure and changes in policy stances. We find evidence for duration-dependent-price adjustments in all the country of the sample. Although positively sloped, after few periods, price-hazard functions often become flat as in Calvo-based models. Instead, wage-hazard shapes are in line with Taylor contracts with the exceptions of France and the United Kingdom. Country comparison shows that price and wage stickiness are correlated. Regarding monetary policy stances, no systematic effect is found. Observed changes are explained by country-specific factors (e.g., market reforms). (C) 2020 Elsevier Ltd. All rights reserved.