Changing Central Bank Pressures and Inflation

Hassan Afrouzi, Marina Halac, Kenneth Rogoff and Pierre Yared

No 32308, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We present a simple long-run aggregate demand and supply framework for evaluating long-run inflation. The framework illustrates how exogenous economic and political economy factors generate central bank pressures that can impact long-run inflation as well as transitions between steady states. We use the analysis to provide a fresh perspective on the forces that drove global inflation downward over the past four decades. We argue that for inflation to remain low and stable in the future, political economy factors, such as strengthened central bank independence or more credible public debt policy, would need to offset the global economic pressures now pushing average long-run inflation upwards.

JEL-codes: E5 E6 (search for similar items in EconPapers)
Date: 2024-04
New Economics Papers: this item is included in nep-ban, nep-cba, nep-mac and nep-mon
Note: EFG ME POL
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