Skip to main content

Inflation Persistence, Inflation Targeting, and the Great Moderation

12.01.07

There is growing evidence that the empirical Phillips curve within the US has changed significantly since the early 1980’s. In particular, inflation persistence has declined sharply. The paper demonstrates that this decline is consistent with a standard Dynamic New Keynesian (DNK) model in which: (i) the variability of technology shocks has declined, and (ii) the central bank more aggressively responds to inflation.

JEL code: E31, E37, E47

Key words: inflation persistence, Phillip’s curve, mark-up shocks, inflation targeting

Suggested citation: Carlstrom, Charles T., and Timothy S. Fuerst, 2007. "Inflation Persistence Inflation Targeting and the Great Moderation," Federal Reserve Bank of Cleveland, Working Paper no. 07-21.

Headlines

  • EC 201908 Population Migration and Generations in Urban Neighborhoods

    Stephan D. Whitaker

    The number of people living in urban neighborhoods has been rising in recent decades. This Commentary investigates changes in the number, ages, and financial status of those who have been moving into and out of urban neighborhoods, using data from the Federal Reserve Bank of New York/Equifax Consumer Credit Panel. I find that since 2000, the increase in urban populations is the result of young adults migrating into urban neighborhoods and senior citizens aging in place. Urban populations have also become more educated and well to do. While declining urban neighborhoods may still outnumber growing urban neighborhoods within some regions, urban leaders there can work toward population or tax base growth knowing that consumer tastes and national trends are favorable to those goals. Read More

  • 12 facts about temporary urbanists

    Stephan D. Whitaker

    Urban areas seem to be enjoying a renaissance of sorts due in part to the many young professionals who have moved into central neighborhoods since the 2000s. Many of these young professionals are thought to move back out after they have started families, but the details of these migration patterns are not well-known. I analyze data from the Federal Reserve Bank of New York/Equifax Consumer Credit Panel to answer 12 questions about these temporary urbanists—those who choose to move into an urban neighborhood and spend part of their early adulthood there. Read More

  • Pittsburgh—Job Market Strengthens

    Mekael Teshome Sarah Mattson

    Adding enough jobs to accommodate a larger labor force is just one way the Pittsburgh metro area’s economy strengthened: Both GDP per capita and income per capita rose, too. Read More

Upcoming EventsSEE ALL