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THE SWINGS OF U.S. INFLATION AND THE GIBSON PARADOX.
- Source :
- Economic Inquiry; Apr2018, Vol. 56 Issue 2, p799-820, 22p, 10 Charts, 6 Graphs
- Publication Year :
- 2018
-
Abstract
- In recent business cycles, U.S. inflation has experienced a reduction of volatility and a severe weakening in the correlation to the nominal interest rate (Gibson paradox). We examine these facts in an estimated dynamic stochastic general equilibrium model with money. Our findings point at a flatter New Keynesian Phillips Curve (higher price stickiness) and a lower persistence of markup shocks as the main explanatory factors. In addition, a higher interest‐rate elasticity of money demand, an increasing role of demand‐side shocks, and a less systematic behavior of Fed's monetary policy also account for the recent patterns of U.S. inflation dynamics. (<italic>JEL</italic> E32, E47) [ABSTRACT FROM AUTHOR]
- Subjects :
- PRICE inflation
GIBSON paradox
RISK aversion
BUSINESS cycles
ECONOMIC equilibrium
Subjects
Details
- Language :
- English
- ISSN :
- 00952583
- Volume :
- 56
- Issue :
- 2
- Database :
- Complementary Index
- Journal :
- Economic Inquiry
- Publication Type :
- Academic Journal
- Accession number :
- 128133090
- Full Text :
- https://doi.org/10.1111/ecin.12523