01656cas a2200253 a 4500 AALejournalIMF001640 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451981773 1018-5941 BD-DhAAL BD-DhAAL Miller, Marcus. Contacts, Credibility and Common Knowledge : Their Influenceon Inflation Convergence / Marcus Miller, Alan Sutherland. Washington, D.C. : International Monetary Fund, 1992. 1 online resource (24 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students In this paper three possible reasons are examined for a sluggish inflation response to a hard currency peg. Models of overlapping wage contracts are analyzed and shown to generate little inertia. This contrasts with the effects of government credibility and the speed of private sector learning, which are shown to have a major impact on the speed of inflation adjustment. But even if individual agents believe the government will not devalue, it is shown that inflation inertia can still arise if these expectations are not common knowledge. Mode of access: Internet Sutherland, Alan. IMF Working Papers; Working Paper ; No. 1992/026 Full text available on IMF http://elibrary.imf.org/view/journals/001/1992/026/001.1992.issue-026-en.xml IMF e-Library