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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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Bibliographic Details
Main Author: Matheson, Troy
Other Authors: Stavrev, Emil
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2013
Series:IMF Working Papers
Subjects:
Economic & Financial Crises & Disasters
Inflation
Import Prices
Labour
Financial Crises
Hyperinflation
Deflation
Unemployment: Models, Duration, Incidence, And Job Search
Unemployment
Prices, Business Fluctuations, And Cycles: Forecasting And Simulation
Labor
Global Financial Crisis, 2008-2009
Price Level
Global Financial Crisis Of 2008-2009
Forecasting And Other Model Applications
Prices
Macroeconomics
Unemployment Rate
Imports
Income Economics
United States
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
Description
Summary: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
Physical Description:12 pages
ISBN:9781484334720

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