NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

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

Olivier Coibion, Yuriy Gorodnichenko

NBER Working Paper No. 19598
Issued in October 2013
NBER Program(s):   EFG   ME

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 consistent with firms having similar expectations as households. The rise in household inflation expectations from 2009 to 2011 can be explained by the increase in oil prices over this time period.

You may purchase this paper on-line in .pdf format from SSRN.com ($5) for electronic delivery.

Information about Free Papers

You should expect a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy.

If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.

E-mail:

Acknowledgments

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w19598

Forthcoming: Is The Phillips Curve Alive and Well After All? Inflation Expectations and the Missing Disinflation, Olivier Coibion, Yuriy Gorodnichenko. in Lessons from the Financial Crisis for Monetary Policy, Gertler. 2014

Users who downloaded this paper also downloaded these:
Gordon w19390 The Phillips Curve is Alive and Well: Inflation and the NAIRU During the Slow Recovery
An, Ang, Bali, and Cakici w19590 The Joint Cross Section of Stocks and Options
Arellano and Bai w19548 Linkages across Sovereign Debt Markets
Svensson w19442 The Possible Unemployment Cost of Average Inflation below a Credible Target
Dahl, Løken, Mogstad, and Salvanes w19595 What Is the Case for Paid Maternity Leave?
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us