Year: 2014
Type: article
Abstract: The rate of inflation fell far less over the period 2007-2013 than in the period 1979-1985 despite similar large increases in the unemployment rate. This paper asks why. Possible explanations include a change in the persistence of inflation, changes in NAIRU, and other shocks. A change in the persistence of inflation, with inflation more anchored in the period 2007-2013 than in the period 1979-1985, is found to be important. The level and change in the NAIRU cannot be precisely estimated, but the data suggest an increase of nearly 1 percentage point since 2007.
Source: American Economic Review
DOI: 10.1257/aer.104.5.31
Author: Mark W. Watson
Institution: Princeton University
Language: English
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2021993522