• Media type: E-Book
  • Title: Inflation : Do Expectations Trump the Gap?
  • Contributor: Piger, Jeremy [Author]; Rasche, Robert [Other]
  • Published: [S.l.]: SSRN, [2006]
  • Published in: FRB of St. Louis Working Paper ; No. 2006-013B
  • Extent: 1 Online-Ressource (49 p)
  • Language: English
  • DOI: 10.2139/ssrn.890659
  • Identifier:
  • Origination:
  • Footnote: Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments July 2006 erstellt
  • Description: We measure the relative contribution of the deviation of real activity from its equilibrium (the gap), quot;supply shockquot; variables, and long-horizon inflation expectations for explaining the U.S. inflation rate in the post-war period. For alternative specifications for the inflation driving process and measures of inflation and the gap we reach a similar conclusion: the contribution of changes in long-horizon inflation expectations dominates that for the gap and supply shock variables. Put another way, variation in long-horizon inflation expectations explains the bulk of the movement in realized inflation. We also use our preferred specification for the inflation driving process to compute a history of model-based forecasts of the inflation rate. For both short and long horizons these forecasts are close to those observed from surveys
  • Access State: Open Access