Relative Goods' Prices, Pure Inflation, and the Phillips Correlation
Ricardo Reis and
Mark Watson
American Economic Journal: Macroeconomics, 2010, vol. 2, issue 3, 128-57
Abstract:
This paper uses a dynamic factor model for the quarterly changes in consumption goods' prices in the United States since 1959 to separate them into three independent components: idiosyncratic relative-price changes, a low-dimensional index of aggregate relative-price changes, and an index of equiproportional changes in all inflation rates that we label "pure" inflation. We use the estimates to answer two questions. First, what share of the variability of inflation is associated with each component, and how are they related to conventional measures of monetary policy and relative-price shocks? Second, what drives the Phillips correlation between inflation and measures of real activity? (JEL E21, E23, E31, E52)
JEL-codes: E21 E23 E31 E52 (search for similar items in EconPapers)
Date: 2010
Note: DOI: 10.1257/mac.2.3.128
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (70)
Downloads: (external link)
http://www.aeaweb.org/articles.php?doi=10.1257/mac.2.3.128 (application/pdf)
http://www.aeaweb.org/aej/mac/data/2009-0013_data.zip (application/zip)
http://www.aeaweb.org/aej/mac/app/2008-0016_app.pdf (application/pdf)
Access to full text is restricted to AEA members and institutional subscribers.
Related works:
Working Paper: Relative Goods' Prices, Pure Inflation, and the Phillips Correlation (2007) 
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:aea:aejmac:v:2:y:2010:i:3:p:128-57
Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions
Access Statistics for this article
American Economic Journal: Macroeconomics is currently edited by Simon Gilchrist
More articles in American Economic Journal: Macroeconomics from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert (mpa@aeapubs.org).