Article ID Journal Published Year Pages File Type
5061057 Economics Letters 2010 4 Pages PDF
Abstract

This paper studies the implications of habit formation in hours for inflation dynamics. Using a New Keynesian Model, we show that habit formation in hours lowers the response of inflation to a monetary policy shock and that it can help to account for the observed sluggish response of inflation.

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Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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Inflation dynamics under habit formation in hours
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