The expectations trap hypothesis

Lawrence Christiano and Christopher Gust

Economic Perspectives, 2000, vol. 25, issue Q II, 21-39

Abstract: This article explores a hypothesis about the take-off in inflation in the early 1970s. According to the expectations trap hypothesis, the Fed was driven to high money growth by a fear of violating the expectations of high inflation that existed at the time. The authors argue that this hypothesis is more compelling than the Phillips curve hypothesis, according to which the Fed produced the high inflation as an unfortunate by product of a conscious decision to jump start a weak economy.

Keywords: Inflation (Finance); Phillips curve (search for similar items in EconPapers)
Date: 2000
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Working Paper: The expectations trap hypothesis (2000)
Working Paper: The expectations trap hypothesis (2000)
Working Paper: The Expectations Trap Hypothesis (2000)
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