{
  "title": "Inflation Dynamics and the Great Recession",
  "publication": "IMF Working Papers, June 1, 2011",
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  "summary": "This paper examines inflation dynamics in the United States since 1960, with a particular focus on the Great Recession. A puzzle emerges when Phillips curves estimated over 1960-2007 are ussed to predice inflation over 2008-2010: inflation should have fallen by more than it did.",
  "sections": [
    {
      "heading": "Study objective and scope",
      "content": "- Examines inflation dynamics in the United States since 1960, with a particular focus on the Great Recession.\n- Investigates why Phillips curves estimated over 1960-2007 predict a larger fall in inflation over 2008-2010 than was observed."
    },
    {
      "heading": "Key methodological modifications",
      "content": "- Measure of core inflation:\n  - Use the median CPI inflation rate as the measure of core inflation.\n- Allowing Phillips curve slope variation:\n  - Permit the slope of the Phillips curve to change with the level and vairance of inflation.\n- Hypotheses tested:\n  - Anchored inflation expectations, distinguishing between \"shock-anchored\" and \"level anchoring\"."
    },
    {
      "heading": "Principal findings",
      "content": "- Phillips curve puzzle:\n  - Phillips curves estimated over 1960-2007 imply inflation should have fallen by more during 2008-2010 than actually occurred.\n  - The puzzle is resolved by the two modifications above (median CPI core measure and slope variation).\n- Inflation expectations:\n  - Expectations have been fully \"shock-anchored\" since the 1980s.\n  - \"Level anchoring\" has been gradual and partial, but significant.\n  - It is not clear whether expectations are sufficiently anchored to prevent deflation over the next few years.\n- Implications for New Keynesian models:\n  - The Great Recession provides fresh evidence against the New Keynesian Phillips curve with rational expectations."
    },
    {
      "heading": "Subject areas and keywords",
      "content": "- Subject: Economic theory, Inflation, Labor, Labor share, Output gap, Prices, Production, Supply shocks, Unemployment\n- Keywords: core CPI, forecasted inflation, Great Recession, Inflation, inflation behavior, inflation expectation, Labor share, median inflation, Output gap, Phillips curve, Supply shocks, Unemployment, WP, XFE inflation\n\n---\n\n Content in this bundle\n\n- wp11121\n  - wp11121 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp11121 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/inflation-dynamics-and-the-great-recession-24891"
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    "Authors: Sandeep Mazumder, Laurence M. Ball",
    "Published: June 1, 2011",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781455263387.001",
    "Examines inflation dynamics in the United States since 1960, with a particular focus on the Great Recession.",
    "Investigates why Phillips curves estimated over 1960-2007 predict a larger fall in inflation over 2008-2010 than was observed.",
    "Measure of core inflation:",
    "Allowing Phillips curve slope variation:",
    "Hypotheses tested:",
    "Phillips curve puzzle:",
    "Inflation expectations:",
    "Implications for New Keynesian models:",
    "Subject: Economic theory, Inflation, Labor, Labor share, Output gap, Prices, Production, Supply shocks, Unemployment",
    "Keywords: core CPI, forecasted inflation, Great Recession, Inflation, inflation behavior, inflation expectation, Labor share, median inflation, Output gap, Phillips curve, Supply shocks, Unemployment, WP, XFE inflation",
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