The Impact of Model Periodicity on Inflation Persistence in Sticky Price and Sticky Information Models

We show that the choice of model periodicity can be of crucial importance for the degree of inflation persistence in the sticky price model of Gali and Gertler and the sticky information model of Mankiw and Reis. The periodicity of the model (passing for example from a semi-annual to a quarterly model) conditions the dynamic response of inflation to a change in monetary growth. The sign of the relationship periodicity-persistence depends on the model considered