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The dynamics of US inflation: Can monetary policy explain the changes?

  • Canova, Fabio
  • Ferroni, Filippo

We investigate the relationship between monetary policy and inflation dynamics in the US using a medium scale structural model. The specification is estimated with Bayesian techniques and fits the data reasonably well. Policy shocks account for a part of the decline in inflation volatility; they have been less effective in triggering inflation responses over time and qualitatively account for the rise and fall in the level of inflation. A number of structural parameter variations contribute to these patterns.

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Article provided by Elsevier in its journal Journal of Econometrics.

Volume (Year): 167 (2012)
Issue (Month): 1 ()
Pages: 47-60

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Handle: RePEc:eee:econom:v:167:y:2012:i:1:p:47-60
DOI: 10.1016/j.jeconom.2011.08.008
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