Premium
INFLATION DYNAMICS AND SUBJECTIVE EXPECTATIONS IN THE UNITED STATES
Author(s) -
ADAM KLAUS,
PADULA MARIO
Publication year - 2011
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.2010.00328.x
Subject(s) - phillips curve , economics , proxy (statistics) , marginal cost , inflation (cosmology) , new keynesian economics , econometrics , sign (mathematics) , measure (data warehouse) , indexation , output gap , monetary policy , keynesian economics , microeconomics , statistics , mathematics , mathematical analysis , physics , database , theoretical physics , computer science
We estimate a forward‐looking New Keynesian Phillips Curve (NKPC) for the United States using data from the Survey of Professional Forecasters as proxy for expected inflation. We obtain significant and plausible estimates for the structural parameters independently of whether we use the output gap or unit labor costs as a measure of marginal costs. Moreover, when estimating a Phillips curve where lagged inflation enters due to price indexation by nonreoptimizing firms, we obtain significant parameter estimates of the sign predicted by theory independently of the marginal cost measure used. ( JEL E31)