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Monetary Policy Mistakes and the Evolution of Inflation Expectations

Orphanides, Athanasios - 2011

What monetary policy framework, if adopted by the Federal Reserve, would have avoided the Great Inflation of the 1960s and 1970s? We use counterfactual simulations of an estimated model of the U.S. economy to evaluate alternative monetary policy strategies. We show that policies constructed...

Persistent link: https://www.econbiz.de/10013124836

Should We Get Rid of the Natural Rate Hypothesis?

Blanchard, Olivier J. - 2017

50 years ago, Milton Friedman articulated the natural rate hypothesis. It was composed of two sub-hypotheses: First, the natural rate of unemployment is independent of monetary policy. Second, there is no long-run trade-off between the deviation of unemployment from the natural rate and...

Persistent link: https://www.econbiz.de/10012942700

The Lack of Wage Growth and the Falling NAIRU

Bell, David N.F. - 2018

that the UK NAIRU has shifted down. The underemployment rate likely would need to fall below 3%, compared to its current …

Persistent link: https://www.econbiz.de/10012921540

U.S. Inflation, Labor'S Share, and the Natural Rate of Unemployment

Gordon, Robert J. - 2021

The Phillips curve was init-ally formulated as a relationship between the rate of change and unemployment, yet what matters for stabilization policy is the rate of inflation, not the rate of wage change. This paper provides new estimates of Phillips curves for both prices and wages extending...

Persistent link: https://www.econbiz.de/10013218329

Sticky Information : A Model of Monetary Nonneutrality and Structural Slumps

Mankiw, N. Gregory; Reis, Ricardo - 2021

This paper explores a model of wage adjustment based on the assumption that information disseminates slowly throughout the population of wage setters. This informational frictional yields interesting and plausible dynamics for employment and inflation in response to exogenous movements in...

Persistent link: https://www.econbiz.de/10013219284

Why Inflation Rose and Fell : Policymakers' Beliefs and Us Postwar Stabilization Policy

Primiceri, Giorgio E. - 2021

This paper provides an explanation for the run-up of U.S. inflation in the 1960s and 1970s and the sharp disinflation in the early 1980s, which standard macroeconomic models have difficulties in addressing. I present a model in which rational policymakers learn about the behavior of the economy...

Persistent link: https://www.econbiz.de/10013223175

Inflation, Flexible Exchange Rates, and the Natural Rate of Unemployment

Gordon, Robert J. - 2021

The most important conclusion of this paper is that the growth rate of the money supply influences the U.S. inflation rate more strongly and promptly than in most previous studies, because the flexible exchange rate system has introduced an additional channel of monetary impact, over and above...

Persistent link: https://www.econbiz.de/10013224206

Wage Dynamics : Reconciling Theory and Evidence

Blanchard, Olivier J.; Katz, Lawrence F. - 2021

U.S. macroeconomic evidence shows a negative relation between the rate of change of wages and unemployment. In contrast, most theories of wage determination imply a negative relation between the level of wages and unemployment. In this paper, we ask whether one can reconcile the empirical...

Persistent link: https://www.econbiz.de/10013225129

Rethinking the Role of NAIRU in Monetary Policy : Implications of Model Formulation and Uncertainty

Estrella, Arturo; Mishkin, Frederic S. - 2021

In this paper we rethink the NAIRU concept and examine whether it might have a useful role in monetary policy. We argue … that it can, but success depends critically on defining NAIRU as a short-run concept and distinguishing it from a long …-run concept like the natural rate of unemployment. We examine what effect uncertainty has on the use of NAIRU in policy …

Persistent link: https://www.econbiz.de/10013231562

The Nature and Measurement of Unemployment

Hall, Robert E. - 2021

Problems of defining and measuring unemployemnt in the contemporary American economy are examined here using data from the official employment survey. The paper finds that only a minority of the unemployed conform to the conventional picture of a worker who has lost one job and is looking f or...

Persistent link: https://www.econbiz.de/10013240990