. Key to our estimation strategy is the use of survey-based expectations for inflation and output. Output and inflation …

individuals use simple rules of thumb (heuristics) to forecast the future inflation and output gap. We compare this model with the …

deflator inflation, real GDP growth, and the rate of growth of M2. We identify 4 shocks-monetary policy, demand non …, with (e.g.) significant increases in the long-run coefficients on inflation and money growth around the time of the Volcker … macroeconomic environment of the last two decades. First, the Great Inflation was due, to a dominant extent, to large demand non …