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Inflation Measured Every Day Keeps Adverse Responses Away : Temporal Aggregation and Monetary Policy Transmission

Jacobson, Margaret; Matthes, Christian; Walker, Todd B. - 2022

aggregation biases estimates of monetary policy transmission. We argue that the information mismatch between private agents and … the econometrician —the source of temporal aggregation bias —is equally important as the more studied mismatch between … policy model and show how temporal aggregation bias can exacerbate initial impulse response functions. Because our modeling …

Persistent link: https://www.econbiz.de/10014077279

Some implications of uncertainty and misperception for monetary policy

Erceg, Christopher J.; Hebden, James; Kiley, Michael T.; … - 2018

When choosing a strategy for monetary policy, policymakers must grapple with mismeasurement of labor market slack, and of the responsiveness of price inflation to that slack. Using stochastic simulations of a small-scale version of the Federal Reserve Boardâ€™s principal New Keynesian...

Persistent link: https://www.econbiz.de/10012016122

The role of expectations in changed inflation dynamics

Pfajfar, Damjan; Roberts, John M. - 2018

The Phillips curve has been much flatter in the past twenty years than in the preceding decades. We consider two hypotheses. One is that prices at the microeconomic level are stickier than they used to be---in the context of the canonical Calvo model, firms are adjusting prices less often. The...

Persistent link: https://www.econbiz.de/10012016213

Perceptions and expectations of inflation by U.S. households

Axelrod, Sandor; Lebow, David E.; Peneva, Ekaterina V. - 2018

To better understand inflation expectations, we examine newly available data on U.S. households' inflation perceptions-what people think inflation has been in the past. The overarching summary is that inflation perceptions look similar to inflation expectations. The central tendencies of the...

Persistent link: https://www.econbiz.de/10012016383

The optimal inflation rate with discount factor heterogeneity

Lepetit, Antoine - 2018

This paper shows that deviations from long-run price stability are optimal in the presence of price stickiness whenever profit and utility flows are discounted at a different rate. In that case, a monetary authority acting under commitment will choose a path for the inflation rate that ends with...

Persistent link: https://www.econbiz.de/10012016683

Monetary policy options at the effective lower bound : assessing the Federal Reserve's current policy toolkit

Chung, Hess; Gagnon, Etienne; Nakata, Taisuke; … - 2019

We simulate the FRB/US model and a number of statistical models to quantify some of the risks stemming from the effective lower bound (ELB) on the federal funds rate and to assess the efficacy of adjustments to the federal funds rate target, balance sheet policies, and forward guidance to...

Persistent link: https://www.econbiz.de/10012016767

Trade exposure and the evolution of inflation dynamics

Gilchrist, Simon; Zakrajšek, Egon - 2019

The diminished sensitivity of inflation to changes in resource utilization that has been observed in many advanced economies over the past several decades is frequently linked to the increase in global economic integration. In this paper, we examine this "globalization" hypothesis using both...

Persistent link: https://www.econbiz.de/10012017495

Getting smart about phones : new price indexes and the allocation of spending between devices and services plans in personal consumption expenditures

Byrne, David; Sichel, Daniel E.; Aizcorbe, Ana M. - 2019

This paper addresses two measurement issues for mobile phones. First, we develop a new mobile phone price index using hedonic quality-adjusted prices for smartphones and a matched-model index for feature phones. Our index falls at an average annual rate of 17 percent during 2010-2018, close to...

Persistent link: https://www.econbiz.de/10012017532

Forecast combination for euro area inflation : a cure in times of crisis?

Hubrich, Kirstin; Skudelny, Frauke - 2016

The period of extraordinary volatility in euro area headline inflation starting in 2007 raised the question whether forecast combination methods can be used to hedge against bad forecast performance of single models during such periods and provide more robust forecasts. We investigate this issue...

Persistent link: https://www.econbiz.de/10011579164

Inflation and deflationary biases in inflation expectations

Lamla, Michael; Pfajfar, Damjan; Rendell, Lea - 2019

We explore the consequences of losing confidence in the price-stability objective of central banks by quantifying the inflation and deflationary biases in inflation expectations. In a model with an occasionally binding zero-lower-bound constraint, we show that an inflation bias as well as a...

Persistent link: https://www.econbiz.de/10012181222

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