IDEAS home Printed from https://ideas.repec.org/a/fip/fedfel/00185.html
   My bibliography  Save this article

Inflation: Stress-Testing the Phillips Curve

Author

Listed:
  • Òscar Jordà
  • Chitra Marti
  • Fernanda Nechio
  • Eric Tallman

Abstract

The well-known Phillips curve describes inflation as a persistent process that depends on public expectations of future inflation and economic slack, a measure of how stretched the economy?s resources are. The role of each component has changed over time. In particular, maintaining the public?s expectations that the Federal Reserve is committed to an inflation target of 2% has grown in importance over the slack component, in part because realigning expectations is costly to undo. Such considerations are important as the Federal Reserve evaluates its future policy options.

Suggested Citation

  • Òscar Jordà & Chitra Marti & Fernanda Nechio & Eric Tallman, 2019. "Inflation: Stress-Testing the Phillips Curve," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    • Handle: RePEc:fip:fedfel:00185
    as

    Download full text from publisher

    File URL: https://www.frbsf.org/economic-research/files/el2019-05.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Congressional Budget Office, 2015. "The 2015 Long-Term Budget Outlook," Reports 50250, Congressional Budget Office.
    2. Congressional Budget Office, 2013. "The 2013 Long-Term Budget Outlook," Reports 44521, Congressional Budget Office.
    3. Olivier Coibion & Yuriy Gorodnichenko, 2015. "Is the Phillips Curve Alive and Well after All? Inflation Expectations and the Missing Disinflation," American Economic Journal: Macroeconomics, American Economic Association, vol. 7(1), pages 197-232, January.
    4. Congressional Budget Office, 2014. "The 2014 Long-Term Budget Outlook," Reports 45471, Congressional Budget Office.
    5. Congressional Budget Office, 2014. "The 2014 Long-Term Budget Outlook," Reports 45471, Congressional Budget Office.
    6. Congressional Budget Office, 2019. "The Budget and Economic Outlook: 2019 to 2029," Reports 54918, Congressional Budget Office.
    7. John C. Williams, 2006. "Inflation persistence in an era of well-anchored inflation expectations," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue oct13.
    8. Congressional Budget Office, 2019. "The 2019 Long-Term Budget Outlook," Reports 55331, Congressional Budget Office.
    9. Congressional Budget Office, 2019. "An Update to the Budget and Economic Outlook: 2019 to 2029," Reports 55551, Congressional Budget Office.
    10. Congressional Budget Office, 2015. "The 2015 Long-Term Budget Outlook," Reports 50250, Congressional Budget Office.
    11. Congressional Budget Office, 2013. "The 2013 Long-Term Budget Outlook," Reports 44521, Congressional Budget Office.
    12. Congressional Budget Office, 2013. "The 2013 Long-Term Budget Outlook," Reports 44521, Congressional Budget Office.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Christian Pfister & Jean-Guillaume Sahuc, 2020. "Unconventional monetary policies: A stock-taking exercise," Revue d'économie politique, Dalloz, vol. 130(2), pages 137-169.
    2. Sitikantha Pattanaik & Silu Muduli & Soumyajit Ray, 2020. "Inflation expectations of households: do they influence wage-price dynamics in India?," Macroeconomics and Finance in Emerging Market Economies, Taylor & Francis Journals, vol. 13(3), pages 244-263, September.
    3. Moretti, Laura & Onorante, Luca & Zakipour-Saber, Shayan, 2019. "Phillips curves in the euro area," Research Technical Papers 8/RT/19, Central Bank of Ireland.
    4. Kabundi, Alain & Poon, Aubrey & Wu, Ping, 2023. "A time-varying Phillips curve with global factors: Are global factors important?," Economic Modelling, Elsevier, vol. 126(C).
    5. Byron Botha & Lauren Kuhn & Daan Steenkamp, 2020. "Is the Phillips curve framework still useful for understanding inflation dynamics in South Africa," Working Papers 10211, South African Reserve Bank.
    6. Aguiar-Conraria, Luís & Martins, Manuel M.F. & Soares, Maria Joana, 2023. "The Phillips curve at 65: Time for time and frequency," Journal of Economic Dynamics and Control, Elsevier, vol. 151(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Duncan Ermini Leaf & Bryan Tysinger & Dana P. Goldman & Darius N. Lakdawalla, 2021. "Predicting quantity and quality of life with the Future Elderly Model," Health Economics, John Wiley & Sons, Ltd., vol. 30(S1), pages 52-79, November.
    2. Thomas Url & Rob J Hyndman & Alexander Dokumentov, 2016. "Long-term forecasts of age-specific participation rates with functional data models," Monash Econometrics and Business Statistics Working Papers 3/16, Monash University, Department of Econometrics and Business Statistics.
    3. Thomas Url & Rob J. Hyndman & Alexander Dokumentov, 2016. "Long-term Forecasts of Age-specific Labour Market Participation Rates with Functional Data Models," WIFO Working Papers 510, WIFO.
    4. D. Tverdokhlibova, 2018. "Theory and practice of the use of fiscal sustainability indicators," Economy and Forecasting, Valeriy Heyets, issue 3, pages 7-47.
    5. Huixin Bi & Wenyi Shen & Shu‐Chun S. Yang, 2022. "Fiscal implications of interest rate normalization in the United States," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 55(2), pages 868-904, May.
    6. Christelis, Dimitris & Georgarakos, Dimitris & Sanz-de-Galdeano, Anna, 2020. "The impact of health insurance on stockholding: A regression discontinuity approach," Journal of Health Economics, Elsevier, vol. 69(C).
    7. Artzrouni, Marc & Tramontana, Fabio, 2013. "The debt trap: a two-compartment train wreck," MPRA Paper 47578, University Library of Munich, Germany.
    8. Sean Higgins & Nora Lustig & Whitney Ruble & Timothy M. Smeeding, 2016. "Comparing the Incidence of Taxes and Social Spending in Brazil and the United States," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(S1), pages 22-46, August.
    9. Robert A. Blecker, 2014. "Economic stagnation in the United States: underlying causes and global consequences," Brazilian Journal of Political Economy, Center of Political Economy, vol. 34(4), pages 689-725.
    10. Francesca Castelli & Damien Moore & Gabriel Ehrlich & Jeffrey Perry, 2014. "Modeling the Budgetary Costs of FHA's Single Family Mortgage Insurance: Working Paper 2014-05," Working Papers 45711, Congressional Budget Office.
    11. Alexander Doser & Ricardo Nunes & Nikhil Rao & Viacheslav Sheremirov, 2023. "Inflation expectations and nonlinearities in the Phillips curve," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 38(4), pages 453-471, June.
    12. Josh O’Harra & John Sabelhaus & Michael Simpson, 2004. "Overview of the Congressional Budget Office Long-Term (CBOLT) Policy Simulation Model: Technical Paper 2004-01," Working Papers 15188, Congressional Budget Office.
    13. Richter, Alexander W., 2015. "Finite lifetimes, long-term debt and the fiscal limit," Journal of Economic Dynamics and Control, Elsevier, vol. 51(C), pages 180-203.
    14. Artzrouni, Marc & Tramontana, Fabio, 2014. "The debt trap: A two-compartment train wreck… and how to avoid it," Journal of Policy Modeling, Elsevier, vol. 36(2), pages 241-256.
    15. Office of Financial Research (ed.), 2013. "Office of Financial Research 2013 Annual Report," Reports, Office of Financial Research, US Department of the Treasury, number 13-2.
    16. William R. Cline, 2014. "Sustainability of Public Debt in the United States and Japan," Working Paper Series WP14-9, Peterson Institute for International Economics.
    17. Keiichiro Kobayashi, 2015. "Public Debt Overhang and Economic Growth," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 11(2), pages 247-276, March.
    18. Gale, William G., 2019. "Fiscal policy with high debt and low interest rates," MPRA Paper 99207, University Library of Munich, Germany.
    19. Sean Higgins, Nora Lustig, Whitney Ruble, and Timothy Smeeding, 2014. "Comparing the Incidence of Taxes and Social Spending in Brazil and the United States - Working Paper 360," Working Papers 360, Center for Global Development.
    20. Louise Sheiner, 2014. "The Determinants of the Macroeconomic Implications of Aging," American Economic Review, American Economic Association, vol. 104(5), pages 218-223, May.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedfel:00185. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Federal Reserve Bank of San Francisco Research Library (email available below). General contact details of provider: https://edirc.repec.org/data/frbsfus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.