Monetary policy key in controlling inflation persistence, study finds.
The article examines how inflation persistence has changed over time and the role of monetary policy in determining it. The researchers used different models to estimate inflation persistence, finding that inflation was high in the late 70s to early 80s and during the late 90s foreign currency crisis. Since 2000, monetary policy has been more aggressive against inflation, leading to stable and low inflation. They also found that inflation persistence increases with macroeconomic instability under passive monetary policy.