Monetary Policy and Inflation Dynamics

By John M. Roberts. 2004

244 citations recorded by the source corpus.

Since the early 1980s, the U.S. economy has changed in some important ways: inflation now rises considerably less when unemployment is low, and the volatility of output and inflation have fallen sharply. This paper examines whether changes in monetary policy can account for these changes in the economy. The results suggest that changes in monetary policy can account for most or all of the change in the inflationunemployment relationship. In addition, changes in policy can explain a large proportion of the reduction in the volatility of the output gap.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/dc266776b8ee6cebdbb95793b1dc1ea0e47cb0bc

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In Economics and Econometrics

Citations in the corpus

Can Financial Innovation Help to Explain the Reduced Volatility of Economic Activity (2005, unknown): “Roberts (2004) calibrated a small dynamic model of the economy and showed that monetary policy could plausibly explain much of the stabilization of the output gap (although not so much of the stabilization of the growth rate of output itself), while Gordon’s (2005) estimates of a small model…”
Macroeconomic Forecasting and Structural Change (2010, background): “Such a claim is partly based on the result that the predictive content of unemployment for inflation has vanished since the mid 80s (Atkeson and Ohanian, 2001; Roberts, 2006; Stock and Watson, 2008a).”
Instability and Nonlinearity in the Euro-Area Phillips Curve (2012, unknown): “Third, recent studies—in particular, by Rudd and Whelan (2007)—cast doubt on the ability of the NKPC (including its hybrid form, i.e., with added lags of inflation) to provide a useful empirical characterization of the inflation process and present evidence in support of the traditional Phillips cur”
Phillips Curve Inflation Forecasts (2008, background): “There is in turn a literature that asks whether these changes in the inflation process can be attributed, in a quantitative (in-sample) way, to changes in monetary policy; papers in this vein include Estrella and Fuhrer (2003), Roberts (2004), Sims and Zha (2004) and Primiceri (2006). A major theme ”
The Predictive Content of the Output Gap for Inflation: Resolving In-Sample and Out-of-Sample Evidence (2006, background): “More particularly, studies such as Clarida, Gali, and Gertler (2000) have found evidence of changes in the behavior of monetary policy, which, as Roberts (2004) notes, could affect the slope of the Phillips curve.”
Why Has U.S. Inflation Become Harder to Forecast (2007, background): “Roberts (2004) identified a flattening of the Phillips curve and a change in the coefficients on lagged inflation in unemployment-rate Phillips curves occurring around 1984, the break date we focus on in much of our analysis.”
Understanding the flattening Phillips curve (2010, methodology): “1 The break in 1984:Q1 for the US follows Roberts (2006).”