Is The Phillips Curve Alive and Well After All ? Inflation Expectations and the Missing Disinflation

@inproceedings{Austin2013IsTP,
  title={Is The Phillips Curve Alive and Well After All ? Inflation Expectations and the Missing Disinflation},
  author={Olivier Coibion Yuriy Gorodnichenko UT Austin},
  year={2013}
}
  • Olivier Coibion Yuriy Gorodnichenko UT Austin
  • Published 2013
We evaluate possible explanations for the absence of a persistent decline in inflation during the Great Recession and find commonly suggested explanations to be insufficient. We propose a new explanation for this puzzle within the context of a standard Phillips curve. If firms’ inflation expectations track those of households, then the missing disinflation can be explained by the rise in their inflation expectations between 2009 and 2011. We present new econometric and survey evidence… CONTINUE READING
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