The Great Recession and the Inflation Puzzle /

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 tim...

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Bibliografiska uppgifter
Huvudupphovsman: Matheson, Troy
Övriga upphovsmän: Stavrev, Emil
Materialtyp: Tidskrift
Språk:English
Publicerad: Washington, D.C. : International Monetary Fund, 2013.
Serie:IMF Working Papers; Working Paper ; No. 2013/124
Länkar:Full text available on IMF
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520 3 |a 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. 
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