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expectation process, we also use a limited rationality process, the adaptive learning model. In this context, we show that the … separate inclusion of a labor market in the model helps to anchor inflation even in a situation of adaptive expectations, a … positive output gap and inflation above target. The estimation results show that the adaptive learning model does a better job …
Persistent link: https://www.econbiz.de/10014254728
their expenditure shares when forming expectations about price inflation. We develop a simple dynamic model of the economy … for individuals to place more weight on the movement of prices in these sectors. We use survey data on expected inflation … the United States. We find food price inflation is weighted more heavily and energy price inflation is weighted less …
Persistent link: https://www.econbiz.de/10013006057
This paper discusses four potential sources of lag dynamics in inflation: non-rational behavior, staggered contracting …, frictions on price adjustment, and shifts in the long-run inflation anchor of agent expectations (the perceived inflation target …). Expressions for inflation dynamics from structural models which admit these different sources of lag dynamics are contrasted …
Persistent link: https://www.econbiz.de/10014074476
The rational expectations hypothesis for survey and model-based inflation forecasts − from the Survey of Professional … nearunit-root effects in inflation and inflation expectations motivates the use of a local-tounity specification of the … inflation process that enables us to test whether the data are generated by locally non-stationary or stationary processes. Thus …
Persistent link: https://www.econbiz.de/10014079200
Standard New Keynesian (NK) models feature an optimal inflation target well below two percent, limited welfare losses …-run Phillips curve between inflation and unemployment and a trade-off between price distortions and output hysteresis that change … the welfare-maximizing inflation level. For a plausible set of parameters, the optimal inflation target is in excess of …
Persistent link: https://www.econbiz.de/10013306762
fixed long-term production reflecting a fixed full employment level underlies the conventional theory, unless a long …
Persistent link: https://www.econbiz.de/10013053400
The formation of the European Union (EU) is the one of the biggest political – economic events of the last 50 years. The aim of this study is to develop EU economy functioning system dynamic model. Main research method is system dynamics. General scheme of EU economy system dynamic model is...
Persistent link: https://www.econbiz.de/10011259562
generate highly persistent series for output, inflation and the nominal interest rate. Agents choose predictors in a near … variables. The model can generate hump-shaped responses of inflation and output to a monetary policy shock if the degree of …
Persistent link: https://www.econbiz.de/10010425852
generate highly persistent series for output, inflation and the nominal interest rate. Agents choose predictors in a near … variables. The model can generate hump-shaped responses of inflation and output to a monetary policy shock if the degree of …
Persistent link: https://www.econbiz.de/10009270313
Worker on-the-job behavior has been largely, and curiously, ignored in mainstream economic theory. This paper corrects … disequilibrium. At its most ambitious, the rational-worker theory identifies general workplace equilibrium as an compelling …
Persistent link: https://www.econbiz.de/10012728469