| 来源类型 | Discussion paper
|
| 规范类型 | 论文
|
| 来源ID | DP6483
|
| DP6483 Escaping Nash and Volatile Inflation |
| Anthony Yates; Martin Ellison
|
| 发表日期 | 2007-09-28
|
| 出版年 | 2007
|
| 语种 | 英语
|
| 摘要 | Why is inflation so much lower and at the same time more stable in developed economies in the 1990s, compared with the 1970s? This paper suggests that the United Kingdom, United States and other countries may have escaped from a volatile inflation equilibrium. Our argument builds on the story proposed by Tom Sargent in The conquest of American inflation, where the fall in inflation in the 1980s was attributed to the changing beliefs informing monetary policy. To explain the escape in inflation volatility, we unwind one of Sargent's simplifications and allow the monetary authority to react to some of the shocks in the economy. In this new model, a revised account of recent history is that when the evidence turned against the existence of a long-run inflation-output trade-off in the 1980s there was an escape from high inflation, but the authorities were also persuaded to stop using changes in inflation to offset shocks. Inflation and inflation volatility therefore escaped in tandem. Our analysis also sheds some light on why the escape in inflation occurred at the time it did. Our model, like the Sargent model it derives from, omits the revolution in institutional design and understanding that underpins monetary policy. So the gloomy predictions for the future derived from a literal reading of it are likely to be unfounded. |
| 主题 | International Macroeconomics
|
| 关键词 | beliefs
Escapes
Phillips curve
Volatility
|
| URL | https://cepr.org/publications/dp6483
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| 来源智库 | Centre for Economic Policy Research (United Kingdom)
|
| 资源类型 | 智库出版物
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| 条目标识符 | http://119.78.100.153/handle/2XGU8XDN/535328
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推荐引用方式
GB/T 7714 |
Anthony Yates,Martin Ellison. DP6483 Escaping Nash and Volatile Inflation. 2007.
|
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