Articlegreen2014

Inflation Persistence, the NAIRU, and the Great Recession

86 citations0/0 files storedAmerican Economic Review

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Monetary Policy and Economic Impact Market Dynamics and Volatility Unemployment and Economic Growth

Abstract

The rate of inflation fell far less over the period 2007-2013 than in the period 1979-1985 despite similar large increases in the unemployment rate. This paper asks why. Possible explanations include a change in the persistence of inflation, changes in NAIRU, and other shocks. A change in the persistence of inflation, with inflation more anchored in the period 2007-2013 than in the period 1979-1985, is found to be important. The level and change in the NAIRU cannot be precisely estimated, but the data suggest an increase of nearly 1 percentage point since 2007.

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References

2007Why Has U.S. Inflation Become Harder to Forecast?2001Evolving Post-World War II U.S. Inflation Dynamics 1997The Time-Varying NAIRU and its Implications for Economic Policy 1997The NAIRU, Unemployment and Monetary Policy 2009Inflation-Gap Persistence in the US 1998Median Unbiased Estimation of Coefficient Variance in a Time-Varying Parameter Model 2003Foundations of the Goldilocks Economy: Supply Shocks and the Time-Varying NAIRU 1998Foundations of the Goldilocks Economy: Supply Shocks and the Time-Varying NAIRU

Cited by

2014Are the Long-Term Unemployed on the Margins of the Labor Market?2016Measuring Uncertainty about Long-Run Predictions 2017The Passthrough of Labor Costs to Price Inflation 2019Slack and Cyclically Sensitive Inflation 2015Low Inflation in the United States: A Summary of Recent Research 2019Coarse Pricing Policies 2015An evaluation of the inflationary pressure associated with short- and long-term unemployment

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