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Understanding the recent behavior of U.S. inflation


  • Robert W. Rich
  • Donald Rissmiller


One of the most surprising features of the long current expansion has been the decline in price inflation through the late 1990s. Some observers interpret the decline as evidence of a permanent change in the relationship between inflation and economic growth. But an analysis based on a standard forecasting model suggests that conventional economic factors_most notably, a decrease in import prices_can account for the low inflation rates in recent years.

Suggested Citation

  • Robert W. Rich & Donald Rissmiller, 2000. "Understanding the recent behavior of U.S. inflation," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 6(Jul).
  • Handle: RePEc:fip:fednci:y:2000:i:jul:n:v.6no.8

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    References listed on IDEAS

    1. Chan G. Huh & Bharat Trehan, 1995. "Modeling the time-series behavior of the aggregate wage rate," Economic Review, Federal Reserve Bank of San Francisco, pages 3-13.
    2. Pinelopi Koujianou Goldberg & Michael M. Knetter, 1997. "Goods Prices and Exchange Rates: What Have We Learned?," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1243-1272, September.
    3. Kenneth M. Emery & Chih-Ping Chang, 1996. "Do wages help predict inflation?," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q I, pages 2-9.
    4. Cara S. Lown & Robert W. Rich, 1997. "Is there an inflation puzzle?," Economic Policy Review, Federal Reserve Bank of New York, issue Dec, pages 51-77.
    5. Thomas Klitgaard, 1999. "Exchange rates and profit margins: the case of Japanese exporters," Economic Policy Review, Federal Reserve Bank of New York, issue Apr, pages 41-54.
    6. Robert J. Gordon, 1981. "Inflation, Flexible Exchange Rates, and the Natural Rate of Unemployment," NBER Working Papers 0708, National Bureau of Economic Research, Inc.
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    Cited by:

    1. William R White, 2000. "Discussion of 'What Went Right in the 1990s? Sources of American and Prospects for World Economic Growth'," RBA Annual Conference Volume,in: David Gruen & Sona Shrestha (ed.), The Australian Economy in the 1990s Reserve Bank of Australia.
    2. Rebecca L Driver & Jennifer V Greenslade & Richard G Pierse, 2003. "The role of expectations in estimates of the NAIRU in the United States and the United Kingdom," Bank of England working papers 180, Bank of England.
    3. Giovanni P. Olivei, 2002. "Exchange rates and the prices of manufacturing products imported into the United States," New England Economic Review, Federal Reserve Bank of Boston, issue Q 1, pages 3-18.
    4. Jonathan McCarthy, 2007. "Pass-Through of Exchange Rates and Import Prices to Domestic Inflation in Some Industrialized Economies," Eastern Economic Journal, Eastern Economic Association, vol. 33(4), pages 511-537, Fall.
    5. Franz Wolfgang, 2001. "Neues von der NAIRU? / News from the NAIRU?," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 221(3), pages 256-284, June.
    6. Scherrer, Christoph, 2001. "New economy: Explosive growth driven by a productivity revolution?," Discussion Papers, Research Unit: Regulation of Work FS II 01-204, Social Science Research Center Berlin (WZB).
    7. Mark Setterfield & Kristen Leblond, 2003. "The phillips curve and US macroeconomic performance during the 1990s," International Review of Applied Economics, Taylor & Francis Journals, vol. 17(4), pages 361-376.
    8. Grömling, Michael, 2000. "Hintergründe der Euro-Abwertung," IW-Trends – Vierteljahresschrift zur empirischen Wirtschaftsforschung, Institut der deutschen Wirtschaft Köln (IW) / Cologne Institute for Economic Research, vol. 27(3), pages 5-19.
    9. Franz, Wolfgang, 2000. "Neues von der NAIRU?," ZEW Discussion Papers 00-41, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    10. Ernst Glatzer & Ernest Gnan & Maria Teresa Valderrama, 2006. "Globalization, Import Prices and Producer Prices in Austria," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 24-43.
    11. Gerberding, Christina, 2001. "The information content of survey data on expected price developments for monetary policy," Discussion Paper Series 1: Economic Studies 2001,09, Deutsche Bundesbank.
    12. Robert W. Rich & Donald Rissmiller, 2001. "Structural change in U.S. wage determination," Staff Reports 117, Federal Reserve Bank of New York.

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    Inflation (Finance) ; Imports;


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