A Phillips Curve with Anchored Expectations and Short-Term Unemployment

Laurence Ball and Sandeep Mazumder

No 20715, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 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 short-term unemployment. This equation explains inflation behavior since 2000, including the failure of high total unemployment since 2008 to reduce inflation greatly. The fit of our equation is especially good when we measure core inflation with the Cleveland Fed’s series on weighted median inflation. We also propose 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. This specification fits U.S. inflation since 1985, including both the anchored-expectations period of the 2000s and the preceding period when expectations were determined by past levels of inflation.

JEL-codes: E31 (search for similar items in EconPapers)
Date: 2014-11
New Economics Papers: this item is included in nep-mac
Note: EFG ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

Published as Laurence Ball & Sandeep Mazumder, 2015. "A Phillips Curve with Anchored Expectations and Short-Term Unemployment," IMF Working Papers, vol 15(39).
Published as Laurence Ball & Sandeep Mazumder, 2019. "A Phillips Curve with Anchored Expectations and Short‐Term Unemployment," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 51(1), pages 111-137, February.
Published as LAURENCE BALL & SANDEEP MAZUMDER, 2019. "A Phillips Curve with Anchored Expectations and Short-Term Unemployment," Journal of Money, Credit and Banking, vol 51(1), pages 111-137.

Downloads: (external link)
http://www.nber.org/papers/w20715.pdf (application/pdf)

Related works:
Journal Article: A Phillips Curve with Anchored Expectations and Short‐Term Unemployment (2019)
Working Paper: A Phillips Curve with Anchored Expectations and Short-Term Unemployment (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:20715

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w20715

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().