Spatiotemporal inflation dynamics in response to a monetary policy shock
DOI:
https://doi.org/10.17811/ebl.2.2.2013.54-65Abstract
This note characterizes the adjustment of the inflation rate towards a new steady-state, in response to a monetary policy shock. The sluggish nature of the adjustment is the straightforward outcome of the type of information dissemination one considers. Namely, firms will be grouped in clusters, and it will be assumed that information spreads faster within than between clusters.
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