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The expectations trap hypothesis Author info | Abstract | Publisher info | Download info | Related research | Statistics Lawrence J. Christiano
Christopher Gust
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The authors examine the inflation take-off of the early 1970s in terms of the expectations trap hypothesis, according to which fear of violating the public’s inflation expectations pushed the Fed into producing high inflation. This interpretation is compared with the Phillips curve hypothesis, according to which the Fed produced high inflation as the unfortunate byproduct of a conscious decision to jump-start a weak economy. Which hypothesis is more plausible has important implications for what should be done to prevent future inflation flare-ups.
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Paper provided by Federal Reserve Bank of Cleveland in its series Working Paper with number
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Date of creation: 2000Date of revision:
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Keywords: Inflation (Finance) ; Phillips curve ; Economic conditions - United States ; Other versions of this item:
This paper has been announced in the following NEP Reports :
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.: Lawrence J. Christiano & Christopher J. Gust, 1999.
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John B. Taylor, 1999.
"Monetary Policy Rules ,"
NBER Books ,
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"The Costs and Benefits of Going from Low Inflation to Price Stability ,"
NBER Chapters ,
in: Reducing Inflation: Motivation and Strategy, pages 123-166
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