Sargent's (1999) model of inflation is amended to include real oil prices and used to study the impact of exogenous supply shocks on the inflation time-series. We analyse whether these shocks can trigger escape-like episodes. We consider unobserved permanent shocks to the natural rate of unemployment and observed permanent shocks to the mean real oil price. Favourable shocks to unemployment decrease the time to first escape; that is, escapes tend to occur much sooner in the presence of these shocks. Shocks to the mean real oil price cause the economy to move quickly to its new equilibrium. Copyright 2006 Royal Economic Society.
(This abstract was borrowed from another version of this item.)
|Date of creation:||01 Aug 2003|
|Date of revision:|
|Contact details of provider:|| Web page: http://comp-econ.org/|
More information through EDIRC
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.:
- Thomas Sargent & Noah Williams & Tao Zha, 2006.
"The Conquest of South American Inflation,"
NBER Working Papers
12606, National Bureau of Economic Research, Inc.
- Williams, Noah, 2004.
"Small noise asymptotics for a stochastic growth model,"
Journal of Economic Theory,
Elsevier, vol. 119(2), pages 271-298, December.
- Noah Williams, 2003. "Small Noise Asymptotics for a Stochastic Growth Model," NBER Working Papers 10194, National Bureau of Economic Research, Inc.
- Noah Williams, 2003. "Small Noise Asymptotics for a Stochastic Growth Model," Computing in Economics and Finance 2003 262, Society for Computational Economics.
- Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-91, June.
- Lars Peter Hansen & Ellen R. McGrattan & Thomas J. Sargent, 1994.
"Mechanics of forming and estimating dynamic linear economies,"
182, Federal Reserve Bank of Minneapolis.
- Anderson, Evan W. & McGrattan, Ellen R. & Hansen, Lars Peter & Sargent, Thomas J., 1996. "Mechanics of forming and estimating dynamic linear economies," Handbook of Computational Economics, in: H. M. Amman & D. A. Kendrick & J. Rust (ed.), Handbook of Computational Economics, edition 1, volume 1, chapter 4, pages 171-252 Elsevier.
- Song Chen, 2000. "Probability Density Function Estimation Using Gamma Kernels," Annals of the Institute of Statistical Mathematics, Springer;The Institute of Statistical Mathematics, vol. 52(3), pages 471-480, September.
- In-Koo Cho & Noah Williams & Thomas J. Sargent, 2002.
"Escaping Nash Inflation,"
Review of Economic Studies,
Oxford University Press, vol. 69(1), pages 1-40.
- Hans M. Amman & David A. Kendrick, . "Computational Economics," Online economics textbooks, SUNY-Oswego, Department of Economics, number comp1, December.
When requesting a correction, please mention this item's handle: RePEc:sce:scecf3:294. 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: (Christopher F. Baum)
If references are entirely missing, you can add them using this form.