Inflation expectations and the evolution of U. S. inflation
Much recent commentary has centered on the importance of well-anchored inflation expectations serving as the foundation of a well-behaved inflation rate. But the difficulty in relying on this principle is that inflation expectations are not directly observable, and thus it is hard to know whether expectations truly play such an anchoring role in the evolution of inflation. In the current circumstances this question is of much more than academic interest, as widely used measures suggest the coincidence of a large unemployment gap and muted production costs with fairly stable long-run inflation expectations. While a high unemployment rate would tend to depress inflation, lower production costs may serve as a counterweight to downward pressure. Which effect will prevail? This brief examines the role of expectations and anchoring by employing expectations proxies derived from surveys of professional forecasters. The brief concludes that there is some evidence that stable long-run expectations have an indirect anchoring effect on inflation, but that to date the effect on resource slack remains considerable.
Volume (Year): (2011)
Issue (Month): ()
|Contact details of provider:|| Postal: 600 Atlantic Avenue, Boston, Massachusetts 02210|
Web page: http://www.bos.frb.org/
More information through EDIRC
|Order Information:|| Email: |
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.:
- Rudd, Jeremy & Whelan, Karl, 2005.
"Modelling Inflation Dynamics: A Critical Review of Recent Research,"
Research Technical Papers
7/RT/05, Central Bank of Ireland.
- Jeremy Rudd & Karl Whelan, 2007. "Modeling Inflation Dynamics: A Critical Review of Recent Research," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(s1), pages 155-170, 02.
- Jeremy B. Rudd & Karl Whelan, 2005. "Modelling inflation dynamics: a critical review of recent research," Finance and Economics Discussion Series 2005-66, Board of Governors of the Federal Reserve System (U.S.).
- Jeremy Rudd & Karl Whelan, 2007. "Modeling inflation dynamics : a critical review of recent research," Open Access publications 10197/201, School of Economics, University College Dublin.
- Karl Whelan & Jeremy Rudd, 2005. "Modelling inflation dynamics : a critical review of recent research," Open Access publications 10197/237, School of Economics, University College Dublin.
- Klaus Adam & Mario Padula, 2011.
"Inflation Dynamics And Subjective Expectations In The United States,"
Western Economic Association International, vol. 49(1), pages 13-25, 01.
- Adam, Klaus & Padula, Mario, 2003. "Inflation dynamics and subjective expectations in the United States," Working Paper Series 0222, European Central Bank.
- Klaus Adam & Mario Padula, 2002. "Inflation Dynamics and Subjective Expectations in the United States," CSEF Working Papers 78, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 02 Jun 2009.
- Ricardo Nunes, 2010. "Inflation Dynamics: The Role of Expectations," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 42(6), pages 1161-1172, 09.
When requesting a correction, please mention this item's handle: RePEc:fip:fedbpb:y:2011:n:11-4. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Catherine Spozio)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.