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Author: Sebastian Heise
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Price inflation in the U.S. has been sluggish and slow to pick up in the last two decades. We show that this missing inflation can be traced to a growing disconnect between unemployment and core goods inflation. We exploit rich industry-level data to show that weakening pass-through from wages to prices in the goods-producing sector is an important source of the slow inflation pick-up in the last two decades. We set up a theoretical framework where markups and pass-through are a function of firms' market shares and show that increased import competition and rising market concentration reduce pass-through from wages to prices. We then use industry-level data and find strong support for these two channels consistent with the implications of our model.
Author: Sebastian Heise
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
Price inflation in the U.S. has been sluggish and slow to pick up in the last two decades. We show that this missing inflation can be traced to a growing disconnect between unemployment and core goods inflation. We exploit rich industry-level data to show that weakening pass-through from wages to prices in the goods-producing sector is an important source of the slow inflation pick-up in the last two decades. We set up a theoretical framework where markups and pass-through are a function of firms' market shares and show that increased import competition and rising market concentration reduce pass-through from wages to prices. We then use industry-level data and find strong support for these two channels consistent with the implications of our model.
Author: Sebastian Heise
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
Price inflation in the U.S. has been sluggish and slow to pick up in the last two decades. We show that this missing inflation can be traced to a growing disconnect between unemployment and core goods inflation. We exploit rich industry-level data to show that weakening pass-through from wages to prices in the goods-producing sector is an important source of the slow inflation pick-up in the last two decades. We set up a theoretical framework where markups and pass-through are a function of firms' market shares and show that increased import competition and rising market concentration reduce pass-through from wages to prices. We then use industry-level data and find strong support for these two channels consistent with the implications of our model.
Author: Cara S. Lown
Publisher:
ISBN:
Category : Inflation (Finance)
Languages : en
Pages : 30
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Author: Paul W. McCracken
Publisher:
ISBN:
Category :
Languages : en
Pages : 88
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Author: Cara S. Lown
Publisher:
ISBN:
Category :
Languages : en
Pages : 30
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Author: Garence Staraci
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Category :
Languages : en
Pages : 74
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This paper proposes a solution to the post-crisis Eurozone "missing inflation" puzzle. I demonstrate that following an initially subdued inflation, economic agents started to forecast inflation by extrapolating past inflation developments as opposed to utilizing a purely forward-looking model. I show that such a shift aggravated the decline of actual inflation through a self-fullling, deflationary spiral jointly involving actual and expected inflation. Using market-implied inflation expectations extracted from inflation derivatives between 2009 and 2016, I provide evidence in favor of the extrapolative nature of these expectations, and incorporate them within the New Keynesian framework, resulting in an extrapolative New Keynesian Phillips curve. An empirical estimation of this augmented curve confirms the need to incorporate such expectations within the baseline framework in order to describe the post-crisis dynamics of inflation in the Eurozone.Subsequently, I show that the inflation inertia created by the backward-looking nature of the extrapolative expectations counteracted the reflationary impact created by the accommodative monetary policy within the Eurozone economy. The presence of such expectations, therefore, allowed a deflationary shock to have long-lasting effects on both expected and actual inflation. The results of this paper also shed light on the recent policy debate that has sought to understand the chronically low inflation among some advanced economies despite strengthening growth.
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ISBN: 9789289927222
Category :
Languages : en
Pages : 38
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In the immediate wake of the Great Recession we didn't see the disinflation that most models predicted and, subsequently, we didn't see the inflation they predicted. We show that these puzzles disappear in a Vector Autoregressive model that properly accounts for domestic and global factors. Such a model reveals, among others, that domestic factors explain much of the inflation dynamics in the 2012-2014 euro area missing inflation episode. Consequently, economists and models that excessively focused on the global nature of inflation were liable to miss the contribution of deflationary domestic shocks during this episode.
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Languages : en
Pages :
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Author:
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Languages : en
Pages :
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Author: Burkhard Heer
Publisher:
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Category : Inflation (Finance)
Languages : de
Pages : 5
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