Inflation globally
The fortunes of the Phillips curve have ebbed and flowed ever since it was proposed by Phillips (1958). Although its origins are primarily as an empirical regularity, there is now a vast literature that provides more formal justification. In recent times, the Great Moderation and the modern era...
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Banco Central de Chile
2020
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oai-20.500.12580-48852021-04-24T11:52:07Z Inflation globally Jorda, Óscar Nechio, Fernanda INFLACIÓN The fortunes of the Phillips curve have ebbed and flowed ever since it was proposed by Phillips (1958). Although its origins are primarily as an empirical regularity, there is now a vast literature that provides more formal justification. In recent times, the Great Moderation and the modern era of central banking brought about the apparent empirical demise of this core relationship. As central banks gained credibility and inflation targeting became widespread, inflation expectations became better anchored; however, the debate is far from settled. Starting in the mid-1980s, several advanced economies have generally experienced the business cycle with barely a ripple in inflation. Paradoxically, a credible, inflation-targeting central bank that cares about the tradeoff spelled by the Phillips curve and sets policy to offset fluctuations in aggregate demand will make empirical estimates of the Phillips curve appear flatter than they really are. The Phillips curve is fundamental for a central bank to evaluate counterfactual policy outcomes. It is not intended to be a forecasting tool. The fortunes of the Phillips curve have ebbed and flowed ever since it was proposed by Phillips (1958). Although its origins are primarily as an empirical regularity, there is now a vast literature that provides more formal justification. In recent times, the Great Moderation and the modern era of central banking brought about the apparent empirical demise of this core relationship. As central banks gained credibility and inflation targeting became widespread, inflation expectations became better anchored; however, the debate is far from settled. Starting in the mid-1980s, several advanced economies have generally experienced the business cycle with barely a ripple in inflation. Paradoxically, a credible, inflation-targeting central bank that cares about the tradeoff spelled by the Phillips curve and sets policy to offset fluctuations in aggregate demand will make empirical estimates of the Phillips curve appear flatter than they really are. The Phillips curve is fundamental for a central bank to evaluate counterfactual policy outcomes. It is not intended to be a forecasting tool. 2020-09-30T19:43:08Z 2020-09-30T19:43:08Z 2020 Artículo 978-956-7421-67-1 978-956-7421-68-8 (pdf) https://hdl.handle.net/20.500.12580/4885 en Series on Central Banking Analysis and Economic Policies no. 27 Serie Banca Central, análisis y políticas económicas, no. 27 Attribution-NonCommercial-NoDerivs 3.0 Chile http://creativecommons.org/licenses/by-nc-nd/3.0/cl/ .pdf Sección o Parte de un Documento p. 269-316 application/pdf Banco Central de Chile |
| institution |
Banco Central |
| collection |
Banco Central |
| language |
English |
| topic |
INFLACIÓN |
| spellingShingle |
INFLACIÓN Jorda, Óscar Nechio, Fernanda Inflation globally |
| description |
The fortunes of the Phillips curve have ebbed and flowed ever
since it was proposed by Phillips (1958). Although its origins are
primarily as an empirical regularity, there is now a vast literature
that provides more formal justification. In recent times, the Great
Moderation and the modern era of central banking brought about
the apparent empirical demise of this core relationship. As central
banks gained credibility and inflation targeting became widespread,
inflation expectations became better anchored; however, the debate
is far from settled. Starting in the mid-1980s, several advanced
economies have generally experienced the business cycle with barely
a ripple in inflation. Paradoxically, a credible, inflation-targeting
central bank that cares about the tradeoff spelled by the Phillips
curve and sets policy to offset fluctuations in aggregate demand will
make empirical estimates of the Phillips curve appear flatter than
they really are. The Phillips curve is fundamental for a central bank
to evaluate counterfactual policy outcomes. It is not intended to be a
forecasting tool. |
| format |
Artículo |
| author |
Jorda, Óscar Nechio, Fernanda |
| author_facet |
Jorda, Óscar Nechio, Fernanda |
| author_sort |
Jorda, Óscar |
| title |
Inflation globally |
| title_short |
Inflation globally |
| title_full |
Inflation globally |
| title_fullStr |
Inflation globally |
| title_full_unstemmed |
Inflation globally |
| title_sort |
inflation globally |
| publisher |
Banco Central de Chile |
| publishDate |
2020 |
| url |
https://hdl.handle.net/20.500.12580/4885 |
| work_keys_str_mv |
AT jordaoscar inflationglobally AT nechiofernanda inflationglobally |
| _version_ |
1718346796191711232 |