Inflation Dynamics And The Great Recession
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Author | : Laurence M. Ball |
Publisher | : International Monetary Fund |
Total Pages | : 58 |
Release | : 2011-06-01 |
Genre | : Business & Economics |
ISBN | : 1455263389 |
This paper examines inflation dynamics in the United States since 1960, with a particular focus on the Great Recession. A puzzle emerges when Phillips curves estimated over 1960-2007 are ussed to predice inflation over 2008-2010: inflation should have fallen by more than it did. We resolve this puzzle with two modifications of the Phillips curve, both suggested by theories of costly price adjustment: we measure core inflation with the median CPI inflation rate, and we allow the slope of the Phillips curve to change with the level and vairance of inflation. We then examine the hypothesis of anchored inflation expectations. We find that expectations have been fully "shock-anchored" since the 1980s, while "level anchoring" has been gradual and partial, but significant. It is not clear whether expectations are sufficiently anchored to prevent deflation over the next few years. Finally, we show that the Great Recession provides fresh evidence against the New Keynesian Phillips curve with rational expectations.
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Release | : 2011 |
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Author | : Mr.Troy Matheson |
Publisher | : International Monetary Fund |
Total Pages | : 12 |
Release | : 2013-05-22 |
Genre | : Business & Economics |
ISBN | : 1484334728 |
Notwithstanding persistently-high unemployment following the Great Recession, inflation in the United States has been remarkably stable. We find that a traditional Phillips curve describes the behavior of inflation reasonably well since the 1960s. Using a non-linear Kalman filter that allows for time-varying parameters, we find that three factors have contributed to the observed stability of inflation: inflation expectations have become better anchored and to a lower level; the slope of the Phillips curve has flattened; and the importance of import-price inflation has increased.
Author | : Yu-Fan Huang |
Publisher | : |
Total Pages | : 33 |
Release | : 2017 |
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ISBN | : |
Ever since the end of the Great Recession, the U.S. economy has experienced a period of mild inflation, which contradicts with the output-inflation relationship depicted by a traditional Phillips curve. This paper examines how the permanent output loss during the Great Recession has affected the ability of the Phillips curve to explain U.S. inflation dynamics. We find great similarity among several established trend-cycle decomposition methods: potential output declined substantially after the Great Recession. Due to the fact that a lower level of potential output implies a lesser deflationary pressure, we then show that the Phillips curve does predict a period of mild inflation. This finding is largely consistent with the observed data.
Author | : Stefan Laseen |
Publisher | : International Monetary Fund |
Total Pages | : 42 |
Release | : 2016-09-07 |
Genre | : Business & Economics |
ISBN | : 1475533845 |
Inflation dynamics, as well as its interaction with unemployment, have been puzzling since the Global Financial Crisis (GFC). In this empirical paper, we use multivariate, possibly time-varying, time-series models and show that changes in shocks are a more salient feature of the data than changes in coefficients. Hence, the GFC did not break the Phillips curve. By estimating variations of a regime-switching model, we show that allowing for regime switching solely in coefficients of the policy rule would maximize the fit. Additionally, using a data-rich reduced-form model we compute conditional forecast scenarios. We show that financial and external variables have the highest forecasting power for inflation and unemployment, post-GFC.
Author | : Simon Gerard Gilchrist (Wirtschaftswissenschaftler) |
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Total Pages | : |
Release | : 2015 |
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Author | : Barry Z. Cynamon |
Publisher | : Cambridge University Press |
Total Pages | : 359 |
Release | : 2013 |
Genre | : Business & Economics |
ISBN | : 1107015898 |
A collection of essays about the US Great Recession of 2007 to 2009 and the subsequent stagnation from prominent scholars.
Author | : Steven Ricchiuto |
Publisher | : Greenleaf Book Group |
Total Pages | : 207 |
Release | : 2016-12-20 |
Genre | : Business & Economics |
ISBN | : 1626343977 |
Who caused the Great Recession? We did. In Disequilibrium,economist Steven Ricchiuto traces how destructive changes in our economic systems have created our present unbalanced economy. He expertly shows how today’s disequilibrium between supply and demand came from decades of misguided economic policies made in response to the Great Inflation of the 1970s and 1980s. Ricchiuto then goes even further, investigating how economic forces created in the World War II era laid the groundwork for this destructive shift. Ricchiuto's timely book offers a method for assessing macro economic credit quality and suggests policy makers alter their behavior to handle new macro dynamics. Today’s economic framework cannot be counted on to protect us forever. In Disequilibrium, Ricchiuto shows us where we went wrong in the past so that we can work to get the future right.
Author | : Geraldine Dany-Knedlik |
Publisher | : |
Total Pages | : 0 |
Release | : 2018* |
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ISBN | : |
Monetary policy; monetary transmission mechanism; financial markets and the macroeconomy; financial accelerator; inflation dynamics; Phillips curve; inflation expectations; nonlinear unobserved component model; structural TVP-VAR; Great Recession.
Author | : Otto Eckstein |
Publisher | : Amsterdam ; New York : North-Holland Publishing Company ; New York : distributors for the U.S. and Canada, Elsevier/North Holland, 1978, 1979 printing. |
Total Pages | : 232 |
Release | : 1978 |
Genre | : Business & Economics |
ISBN | : |