Modeling inflation dynamics: a critical review of recent research

Jeremy Rudd and Karl Whelan ()

Open Access publications from School of Economics, University College Dublin

Abstract: In recent years, a broad academic consensus has arisen that favors using rational expectations sticky-price models to capture inflation dynamics. We review the principal conclusions of this literature concerning: (1) the ability of these models to fit the data; (2) the importance of rational forward-looking expectations in price setting; and (3) the appropriate measure of inflationary pressures. We argue that existing models fail to provide a useful empirical description of the inflation process.

Keywords: Phillips curve; Sticky prices; Rational expectations; Inflation (Finance)--Mathematical models; Rational expectations (Economic theory) (search for similar items in EconPapers)
JEL-codes: E31 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2007-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (184)

Published in: Journal of Money, Credit and Banking, 39(s1) 2007-02

Downloads: (external link)
http://hdl.handle.net/10197/201 Open Access version, 2007 (application/pdf)

Related works:
Journal Article: Modeling Inflation Dynamics: A Critical Review of Recent Research (2007)
Journal Article: Modeling Inflation Dynamics: A Critical Review of Recent Research (2007)
Working Paper: Modelling Inflation Dynamics: A Critical Review of Recent Research (2005)
Working Paper: Modelling inflation dynamics: a critical review of recent research (2005)
Working Paper: Modelling inflation dynamics: a critical review of recent research (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:ucn:oapubs:10197/201

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