similar), instead of gaps. Second, we study the components of inflation instead of the standard aggregates. We find that some … inflation components have strong and stable correlations with the cyclical component of real activity; these components tend to … internationally determined, have weak and/or unstable correlations with cyclical activity. We construct a new inflation index …

In the United States, the rate of price inflation falls in recessions. Turning this observation into a useful inflation … forecasting equation is difficult because of multiple sources of time variation in the inflation process, including changes in Fed … policy and credibility. We propose a tightly parameterized model in which the deviation of inflation from a stochastic trend …