Calvo vs. Rotemberg in a Trend Inflation World - Wiwi Uni-Frankfurt
Calvo vs. Rotemberg in a Trend Inflation World - Wiwi Uni-Frankfurt
Calvo vs. Rotemberg in a Trend Inflation World - Wiwi Uni-Frankfurt
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1<br />
0.5<br />
0<br />
<strong>Inflation</strong> <strong>vs</strong>. price dispersion: Raw<br />
0.5<br />
<strong>Inflation</strong><br />
Price dispersion<br />
1<br />
1984 1988 1992 1996 2000 2004 2008<br />
3<br />
2<br />
1<br />
0<br />
1<br />
2<br />
<strong>Inflation</strong> <strong>vs</strong>. price dispersion: Standardized<br />
3<br />
1984 1988 1992 1996 2000 2004 2008<br />
5<br />
0<br />
<strong>Inflation</strong> <strong>vs</strong>. auxiliary process: Raw<br />
<strong>Inflation</strong><br />
Auxiliary process<br />
5<br />
1984 1988 1992 1996 2000 2004 2008<br />
4<br />
2<br />
0<br />
2<br />
<strong>Inflation</strong> <strong>vs</strong>. auxiliary process: Standardized<br />
4<br />
1984 1988 1992 1996 2000 2004 2008<br />
Figure 4: <strong>Calvo</strong> model: In‡ation <strong>vs</strong>. latent factors. Filtered factors estimated<br />
under 2.5 per cent trend <strong>in</strong>‡ation and zero <strong>in</strong>dexation.<br />
35
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