Download or read book Inflation Expectations and the Stability of the Phillips Curve Relationship written by Markus Roth and published by . This book was released on 2013 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We analyze the Phillips curve relationship in the euro area and the U.S. using monthly survey data on expected inflation. The dataset enables us to estimate models of the Phillips curve without assuming rational expectation formation. We find evidence for a Phillips curve relationship consistent with the theory. Furthermore, we show that the Phillips curve relationship is stable with structural regime switches which are of minor importance. Moreover, the Phillips curve relationship has been subject to switches in the shock volatilities.

Download or read book A Phillips Curve with Anchored Expectations and Short Term Unemployment written by Laurence M. Ball and published by International Monetary Fund. This book was released on 2015-02-25 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the recent behavior of core inflation in the United States. We specify a simple Phillips curve based on the assumptions that inflation expectations are fully anchored at the Federal Reserve’s target, and that labor-market slack is captured by the level of shortterm unemployment. This equation explains inflation behavior since 2000, including the failure of high total unemployment since 2008 to reduce inflation greatly. The fit of our equation is especially good when we measure core inflation with the Cleveland Fed’s series on weighted median inflation. We also propose a more general Phillips curve in which core inflation depends on short-term unemployment and on expected inflation as measured by the Survey of Professional Forecasters. This specification fits U.S. inflation since 1985, including both the anchored-expectations period of the 2000s and the preceding period when expectations were determined by past levels of inflation.

Download or read book Inflation Expectations written by Peter J. N. Sinclair and published by Routledge. This book was released on 2009-12-16 with total page 402 pages. Available in PDF, EPUB and Kindle. Book excerpt: Inflation is regarded by the many as a menace that damages business and can only make life worse for households. Keeping it low depends critically on ensuring that firms and workers expect it to be low. So expectations of inflation are a key influence on national economic welfare. This collection pulls together a galaxy of world experts (including Roy Batchelor, Richard Curtin and Staffan Linden) on inflation expectations to debate different aspects of the issues involved. The main focus of the volume is on likely inflation developments. A number of factors have led practitioners and academic observers of monetary policy to place increasing emphasis recently on inflation expectations. One is the spread of inflation targeting, invented in New Zealand over 15 years ago, but now encompassing many important economies including Brazil, Canada, Israel and Great Britain. Even more significantly, the European Central Bank, the Bank of Japan and the United States Federal Bank are the leading members of another group of monetary institutions all considering or implementing moves in the same direction. A second is the large reduction in actual inflation that has been observed in most countries over the past decade or so. These considerations underscore the critical – and largely underrecognized - importance of inflation expectations. They emphasize the importance of the issues, and the great need for a volume that offers a clear, systematic treatment of them. This book, under the steely editorship of Peter Sinclair, should prove very important for policy makers and monetary economists alike.

Download or read book The Great Inflation written by Michael D. Bordo and published by University of Chicago Press. This book was released on 2013-06-28 with total page 545 pages. Available in PDF, EPUB and Kindle. Book excerpt: Controlling inflation is among the most important objectives of economic policy. By maintaining price stability, policy makers are able to reduce uncertainty, improve price-monitoring mechanisms, and facilitate more efficient planning and allocation of resources, thereby raising productivity. This volume focuses on understanding the causes of the Great Inflation of the 1970s and ’80s, which saw rising inflation in many nations, and which propelled interest rates across the developing world into the double digits. In the decades since, the immediate cause of the period’s rise in inflation has been the subject of considerable debate. Among the areas of contention are the role of monetary policy in driving inflation and the implications this had both for policy design and for evaluating the performance of those who set the policy. Here, contributors map monetary policy from the 1960s to the present, shedding light on the ways in which the lessons of the Great Inflation were absorbed and applied to today’s global and increasingly complex economic environment.

Download or read book Understanding Inflation and the Implications for Monetary Policy written by Jeff Fuhrer and published by MIT Press. This book was released on 2009-09-11 with total page 517 pages. Available in PDF, EPUB and Kindle. Book excerpt: Current perspectives on the Phillips curve, a core macroeconomic concept that treats the relationship between inflation and unemployment. In 1958, economist A. W. Phillips published an article describing what he observed to be the inverse relationship between inflation and unemployment; subsequently, the “Phillips curve” became a central concept in macroeconomic analysis and policymaking. But today's Phillips curve is not the same as the original one from fifty years ago; the economy, our understanding of price setting behavior, the determinants of inflation, and the role of monetary policy have evolved significantly since then. In this book, some of the top economists working today reexamine the theoretical and empirical validity of the Phillips curve in its more recent specifications. The contributors consider such questions as what economists have learned about price and wage setting and inflation expectations that would improve the way we use and formulate the Phillips curve, what the Phillips curve approach can teach us about inflation dynamics, and how these lessons can be applied to improving the conduct of monetary policy. Contributors Lawrence Ball, Ben Bernanke, Oliver Blanchard, V. V. Chari, William T. Dickens, Stanley Fischer, Jeff Fuhrer, Jordi Gali, Michael T. Kiley, Robert G. King, Donald L. Kohn, Yolanda K. Kodrzycki, Jane Sneddon Little, Bartisz Mackowiak, N. Gregory Mankiw, Virgiliu Midrigan, Giovanni P. Olivei, Athanasios Orphanides, Adrian R. Pagan, Christopher A. Pissarides, Lucrezia Reichlin, Paul A. Samuelson, Christopher A. Sims, Frank R. Smets, Robert M. Solow, Jürgen Stark, James H. Stock, Lars E. O. Svensson, John B. Taylor, Mark W. Watson

Download or read book The Unemployment Inflation Tradeoff written by John Rutledge and published by . This book was released on 1975 with total page 134 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Phillips Curves Phillips Lines and the Unemplyment Costs of Overheating written by Mr.Peter B. Clark and published by International Monetary Fund. This book was released on 1997-02-01 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: Most empirical work on the U.S. Phillips curve has had a strong tendency to impose global linearity on the data. The basic objective of this paper is to reconsider the issue of nonlinearity and to underscore its importance for policymaking. After briefly reviewing the history of the Phillips curve and the basis for convexity, we derive it explicitly using standard models of wage and price determination. We provide some empirical estimates of Phillips curves and Phillips lines for the United States and use some illustrative simulations to contrast the policy implications of the two models.

Download or read book At what Cost Price Stability written by Andrea Beccarini and published by CEPS. This book was released on 2008 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: With inflation increasing all over the world, central banks have to consider with some care how quickly to re-establish price stability. A key issue in this context is the short-run cost in terms of foregone output and higher unemployment. The aim of this paper is to determine the 'sacrifice ratio' for the Euro Area and for the United States. The main findings are: the cost of reducing inflation is in most cases higher in the US than in the EA. For example, reducing (headline) inflation by 1% point requires a decline of output of 1.4% in the EU, but 2.3% for the US. Considering core inflation, the sacrifice ratio in terms of output is somewhat higher for the Euro Area (around 4) compared to 3.2 for the US. However, the sacrifice ratios in terms of unemployment are always much larger for the US. Reducing headline inflation by 1% requires an increase in unemployment of little more than 1% in the EA, compared to 8% in the US.However, there is also a long-run 'hysterisis' cost that is specific to the Euro Area since the reaction of unemployment to output depends on the state of the economy. During downturns this relationship worsens. This implies that a recession engineered to combat inflation will have an additional cost in terms of lower unemployment later, even after the recovery of the economy.

Download or read book Inflation and the Phillips curve written by Thomas Vogt and published by GRIN Verlag. This book was released on 2008-06-09 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: Seminar paper from the year 2007 in the subject Economics - Economic Cycle and Growth, grade: 1,0, University of applied sciences Frankfurt a. M., course: Inflation and the Phillips Curve, language: English, abstract: In this paper the author will discuss the relation of inflation and the Phillips curve. First, the concept and the different forms of inflation and their economical reasons will be explained. Afterwards the three prevalent models of the Phillips curve in literature are introduced and explained. The author will look into the theory of the NRU and NAIRU and how they relate to the concept of the Phillips curve. In the last part of the paper, the applicability and validity of the Phillips curve for Germany is investigated more closely and the characteristics of the Phillips curve for Germany will be described. The Phillips curve originates of an empirical study of Arthur W. Phillips in 1958. There he describes the existence of a negative relationship between the rate of unemployment and the nominal wage growth in the UK between the years 1861-1957. The curve shows, that the higher the rate of unemployment, the lower the rate of wage inflation. His work represented a milestone in the development of macroeconomics. Especially in the sixties and seventies, politicians in the USA and Europe thought they can interpret the relation of inflation and unemployment as a menu card of fiscal and monetary policy. A well-known quote by Helmut Schmidt, former chancellor of Germany in the 1970s, supports this thinking, when he said that an inflation rate of five percent is better than a five percent rate of unemployment. In the following years, a lot of different economist (Keynes, Samuelson, Friedman, Phelps, Lipsey et al.) modified the original curve and supported it with their customized theories. In this paper the author will discuss the relation of inflation and the Phillips curve. First, the concept and the different forms of inflation and their economical reasons will be explained. Afterwards the three prevalent models of the Phillips curve in literature are introduced and explained. The author will look into the theory of the NRU and NAIRU and how they relate to the concept of the Phillips curve. In the last part of the paper, the applicability and validity of the Phillips curve for Germany is investigated more closely and the characteristics of the Phillips curve for Germany will be described.

Download or read book Macroeconomics and the Phillips Curve Myth written by James Forder and published by OUP Oxford. This book was released on 2014-10-09 with total page 321 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book reconsiders the role of the Phillips curve in macroeconomic analysis in the first twenty years following the famous work by A. W. H. Phillips, after whom it is named. It argues that the story conventionally told is entirely misleading. In that story, Phillips made a great breakthrough but his work led to a view that inflationary policy could be used systematically to maintain low unemployment, and that it was only after the work of Milton Friedman and Edmund Phelps about a decade after Phillips' that this view was rejected. On the contrary, a detailed analysis of the literature of the times shows that the idea of a negative relation between wage change and unemployment - supposedly Phillips' discovery - was commonplace in the 1950s, as were the arguments attributed to Friedman and Phelps by the conventional story. And, perhaps most importantly, there is scarcely any sign of the idea of the inflation-unemployment tradeoff promoting inflationary policy, either in the theoretical literature or in actual policymaking. The book demonstrates and identifies a number of main strands of the actual thinking of the 1950s, 1960s, and 1970s on the question of the determination of inflation and its relation to other variables. The result is not only a rejection of the Phillips curve story as it has been told, and a reassessment of the understanding of the economists of those years of macroeconomics, but also the construction of an alternative, and historically more authentic account, of the economic theory of those times. A notable outcome is that the economic theory of the time was not nearly so naïve as it has been portrayed.

Download or read book Defensive Expectations written by Liviu Voinea and published by Springer Nature. This book was released on 2020-12-09 with total page 216 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book explains why inflation remains subdued after recessions, based on three revolutionary concepts: defensive expectations, compensatory savings, and cumulative wage gap. When income falls, consumption falls, and savings rise, as people rebuild their past wealth. Households will not spend more until they fully recover what they lost. The revised Phillips Curve explains that current inflation depends on the cumulative difference between current income and past income. This new theory is tested and validated by data for US since 1960 to date and for 35 OECD countries from 1990 to date. A number of policy implications are derived from these results. The book calls for an optimal policy mix between monetary policy and fiscal policy; it also discusses the coronavirus crisis as an extreme case of defensive expectations.

Download or read book The Inflation Targeting Debate written by Ben S. Bernanke and published by University of Chicago Press. This book was released on 2007-11-01 with total page 469 pages. Available in PDF, EPUB and Kindle. Book excerpt: Over the past fifteen years, a significant number of industrialized and middle-income countries have adopted inflation targeting as a framework for monetary policymaking. As the name suggests, in such inflation-targeting regimes, the central bank is responsible for achieving a publicly announced target for the inflation rate. While the objective of controlling inflation enjoys wide support among both academic experts and policymakers, and while the countries that have followed this model have generally experienced good macroeconomic outcomes, many important questions about inflation targeting remain. In Inflation Targeting, a distinguished group of contributors explores the many underexamined dimensions of inflation targeting—its potential, its successes, and its limitations—from both a theoretical and an empirical standpoint, and for both developed and emerging economies. The volume opens with a discussion of the optimal formulation of inflation-targeting policy and continues with a debate about the desirability of such a model for the United States. The concluding chapters discuss the special problems of inflation targeting in emerging markets, including the Czech Republic, Poland, and Hungary.

Download or read book Inflation Unemployment and Money written by Bruno Jossa and published by Edward Elgar Publishing. This book was released on 1998 with total page 184 pages. Available in PDF, EPUB and Kindle. Book excerpt: This comprehensive book presents an original reconstruction of the different interpretations of the Phillips curve. The authors demonstrate through an in-depth analysis how it is possible to find non-neoclassical foundations in the trade-off between inflation and unemployment. The debate is presented from a historical perspective which charts the evolution of the Phillips curve from a non-neoclassical perspective, taking account of post Keynesian literature. In the first part of the book the authors focus on the origins of the Phillips curve and they critically analyse Richard Lipsey's interpretation and approach to the Phillips curve. They then explore the neoclassical and monetarist interpretation, paying special attention to the evolution of monetarism and the Keynesian critique of this approach. The Kaleckian, Keynesian and Marxist interpretations of the Phillips trade-off are then presented. Here the authors show how the relationship between inflation, unemployment and money described in these approaches accurately reflects the fundamental features of today's capitalist economies. In the final section a new Phillips curve is constructed, taking into account the non-accelerating inflation rate of unemployment and the hysteresis of it. Inflation, Unemployment and Money will be of interest to macroeconomists, post Keynesians and monetary and financial economists.

Download or read book Stability and Inflation written by Alban William Housego Phillips and published by Chichester ; Toronto : Wiley. This book was released on 1978 with total page 350 pages. Available in PDF, EPUB and Kindle. Book excerpt: The phillips curvs; Models of inflation and stabilization policies; Econometric methods for dynamic models.

Download or read book NBER Macroeconomics Annual 2003 written by Mark Gertler and published by Mit Press. This book was released on 2004 with total page 432 pages. Available in PDF, EPUB and Kindle. Book excerpt: The NBER Macroeconomics Annual presents pioneering work in macroeconomics by leading academic researchers to an audience of public policymakers and the academic community. Each commissioned paper is followed by comments and discussion. This year's edition provides a mix of cutting-edge research and policy analysis on such topics as productivity and information technology, the increase in wealth inequality, behavioral economics, and inflation.

Download or read book Monetary Policy with Phillips Curve written by Debasis Bandyopadhyay and published by . This book was released on 2017 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: Despite the transparency and independent operations of the central bank, the costly disinflation in the early nineties and the apparent lack of contemporaneous correlation between inflation and unemployment in the subsequent periods brings into question the validity of the Phillips curve hypothesis for the New Zealand economy. Nevertheless, drawing on an empirical exercise built on a narrative history, I argue that the hypothesis remains a valid view of the interaction between the real and nominal sides of the economy if we interpret that history with theories of credibility to account for the dynamics of inflation expectations. Between 1987 and 2015, the survey data of inflation expectations identifies, through either a new classical or a new Keynesian representation, the changing location of the Phillips curve, illustrating how inflation expectations directly affect both inflation and unemployment, without undermining their theoretical relationship. Findings suggest that a credible regime between 1993 and 1999 precipitated a stable manifold of relatively flat Phillips curves. However, probably the loss of credibility in the post-1999 era left the policymakers with a steeper Phillips curve with unstable locations. Use of the nontradable component of the consumer price index (CPI) rather than the CPI as a whole strengthens the policy conclusions based on the Phillips curve hypothesis.

Download or read book UK Phillips Curves and Monetary Policy written by Andrew G. Haldane and published by . This book was released on 2000 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: