Self-fulfilling expectations and the inflation of the 1970s: evidence from the Livingston Survey

Sylvain Leduc (), Keith Sill () and Tom Stark

No 02-13, Working Papers from Federal Reserve Bank of Philadelphia

Abstract: Using survey data on expectations, the authors examine whether the post-war data are consistent with theories of a self-fulfilling inflation episode during the 1970s. Among commonly cited factors, oil and fiscal shocks do not appear to have triggered an increase in expected inflation that was subsequently validated by monetary policy. However, the evidence suggests that, prior to 1979, the Fed accommodated temporary shocks to expected inflation, which then led to permanent increases in actual inflation. The authors do not find this behavior in the post-1979 data.

Keywords: Inflation (Finance); Livingston Survey (search for similar items in EconPapers)
Date: 2002
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Journal Article: Self-fulfilling expectations and the inflation of the 1970s: Evidence from the Livingston Survey (2007)
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