Year: 2022
Type: article
Abstract: It has been claimed that the fall in US inflation during the Great Recession was surprisingly small. One possible explanation for this is that the Phillips curve is unstable and that its slope was lower around the Great Recession. We investigate the importance of time‐varying parameters using Bayesian vector autoregressions for inflation and unemployment. We find support for time variation in the inflation equation and an unstable Phillips curve that was somewhat flatter between 2005 and 2013. However, conditional forecasts mostly suggest that inflation was not unexpectedly high around the Great Recession, which puts the claim of a “missing disinflation” into question.
DOI: 10.1111/sjoe.12508
Authors: Sune Karlsson, Pär Österholm
Institutions: Örebro University, National Institute of Economic Research
Language: English
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $3,050
OpenAlex ID: W2807174202