Empirical estimates of changing inflation dynamics
AbstractThis paper provides an array of empirical evidence bearing on potentially important changes in the dynamics of U.S. inflation. We examine the overall performance of Phillips curves relative to some well-known benchmarks, the efficiency with which the Federal Reserve's Greenbook forecasts of inflation use real activity information, and shifts in the key determinants of the reduced-form "triangle model" of inflation. We develop a structural model-based interpretation of observed reduced-form shifts and conduct a reduced-form assessment of the relationship between core and headline measures of inflation, centering on the persistent "pass-through" of relative price changes into core and headline inflation measures, and a parallel exercise that examines the pass-through of key relative price changes into wage and compensation measures.
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Bibliographic InfoPaper provided by Federal Reserve Bank of Boston in its series Working Papers with number 09-4.
Date of creation: 2009
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-07-28 (All new papers)
- NEP-CBA-2009-07-28 (Central Banking)
- NEP-MAC-2009-07-28 (Macroeconomics)
- NEP-MON-2009-07-28 (Monetary Economics)
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