The Expectations Trap Hypothesis

Lawrence Christiano and Christopher Gust

No 7809, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We explore a hypothesis about the take-off in inflation that occurred in the early 1970s. According to the expectations trap hypothesis, the Fed was pushed into producing the high inflation out of a fear of violating the public's inflation expectations. We compare this hypothesis with 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. Which hypothesis is more plausible has important implications for what needs to be done to prevent other inflation flare-ups.

JEL-codes: E1 (search for similar items in EconPapers)
Date: 2000-07
Note: EFG
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (66)

Published as Christiano, Lawrence J. and Christopher Gust. "The Expectations Trap Hypothesis," FRB Chicago - Economic Perspectives, 2000, v24(2,Second-Qtr), 21-39.

Downloads: (external link)
http://www.nber.org/papers/w7809.pdf (application/pdf)

Related works:
Journal Article: The expectations trap hypothesis (2000)
Working Paper: The expectations trap hypothesis (2000)
Working Paper: The expectations trap hypothesis (2000)
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:7809

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w7809

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 ().