{
  "title": "A Phillips Curve with Anchored Expectations and Short-Term Unemployment",
  "publication": "IMF Working Papers, February 25, 2015",
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  "summary": "This paper examines the recent behavior of core inflation in the United States. We specify a simple Phillips curve based on the assumptions that inflation expectations are fully anchored at the Federal Reserve’s target, and that labor-market slack is captured by the level of shortterm unemployment.",
  "sections": [
    {
      "heading": "Summary and purpose",
      "content": "- Examines recent behavior of core inflation in the United States.\n- Specifies a simple Phillips curve based on two assumptions:\n  - Inflation expectations are fully anchored at the Federal Reserve’s target.\n  - Labor-market slack is captured by the level of short-term unemployment.\n- Proposes a more general Phillips curve in which core inflation depends on short-term unemployment and on expected inflation as measured by the Survey of Professional Forecasters (SPF)."
    },
    {
      "heading": "Key findings and empirical results",
      "content": "- The simple anchored-expectations Phillips curve explains inflation behavior since 2000.\n- The equation accounts for \"the failure of high total unemployment since 2008 to reduce inflation greatly.\"\n- Fit of the simple equation is especially good when core inflation is measured with the Cleveland Fed’s series on weighted median inflation.\n- The more general Phillips curve specification fits U.S. inflation since 1985, encompassing:\n  - The anchored-expectations period of the 2000s.\n  - The preceding period when expectations were determined by past levels of inflation."
    },
    {
      "heading": "Methodology and data inputs",
      "content": "- Core inflation measures examined include the Cleveland Fed’s series on weighted median inflation.\n- Expected inflation is measured using the Survey of Professional Forecasters (SPF) in the general specification.\n- Labor-market slack is proxied by the level of short-term unemployment rather than total unemployment."
    },
    {
      "heading": "Policy-relevant implications",
      "content": "- Anchored inflation expectations can alter the inflationary response to unemployment, reducing the sensitivity of inflation to high total unemployment.\n- Short-term unemployment is a critical labor-market slack indicator for explaining core inflation dynamics in the U.S. since 2000.\n- Incorporating direct measures of expected inflation (SPF) yields a Phillips curve that explains a longer historical span (since 1985), implying policy analysis should account for the evolving formation of expectations.\n\n---\n\n Content in this bundle\n\n- Wp1539\n  - Wp1539 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Wp1539 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/a-phillips-curve-with-anchored-expectations-and-short-term-unemployment-42735"
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    "Authors: Laurence M. Ball, Sandeep Mazumder",
    "Published: February 25, 2015",
    "Series: IMF Working Papers",
    "Examines recent behavior of core inflation in the United States.",
    "Specifies a simple Phillips curve based on two assumptions:",
    "Proposes a more general Phillips curve in which core inflation depends on short-term unemployment and on expected inflation as measured by the Survey of Professional Forecasters (SPF).",
    "The simple anchored-expectations Phillips curve explains inflation behavior since 2000.",
    "The equation accounts for \"the failure of high total unemployment since 2008 to reduce inflation greatly.\"",
    "Fit of the simple equation is especially good when core inflation is measured with the Cleveland Fed’s series on weighted median inflation.",
    "The more general Phillips curve specification fits U.S. inflation since 1985, encompassing:",
    "Core inflation measures examined include the Cleveland Fed’s series on weighted median inflation.",
    "Expected inflation is measured using the Survey of Professional Forecasters (SPF) in the general specification.",
    "Labor-market slack is proxied by the level of short-term unemployment rather than total unemployment.",
    "Anchored inflation expectations can alter the inflationary response to unemployment, reducing the sensitivity of inflation to high total unemployment.",
    "Short-term unemployment is a critical labor-market slack indicator for explaining core inflation dynamics in the U.S. since 2000.",
    "Incorporating direct measures of expected inflation (SPF) yields a Phillips curve that explains a longer historical span (since 1985), implying policy analysis should account for the evolving formation of expectations.",
    "**Wp1539**"
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