One strand of this research has examined the persistence of inflation by allowing for potential changes in inflation regimes.11 The results show that the inflation process in Canada can be divided into three distinct regimes: one with extremely high persistence and high inflation rates, one with fairly low persistence and moderate inflation rates, and one with low persistence and low inflation rates.
I share the concern of Muellbauer that the standard DSGE framework imposes unrealistic micro-foundations for the behaviour of households as embodied in the ‘rational expectations permanent income’ model of 10 3/6  BIS central bankers' speeches  consumption.10 In typical representative-agent models, consumption behaviour is captured by an Euler equation, an inter-temporal optimality condition that links today’s level of consumption to expected consumption in the next period and further into the future.