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Inflation Dynamics *
Author(s) -
Mishkin Frederic S.
Publication year - 2007
Publication title -
international finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.458
H-Index - 39
eISSN - 1468-2362
pISSN - 1367-0271
DOI - 10.1111/j.1468-2362.2007.00205.x
Subject(s) - stylized fact , economics , inflation (cosmology) , monetary policy , keynesian economics , phillips curve , persistence (discontinuity) , dynamics (music) , monetary economics , real interest rate , inflation targeting , macroeconomics , physics , theoretical physics , geotechnical engineering , acoustics , engineering
This paper first outlines the key stylized facts about changes in inflation dynamics in recent years: (1) inflation persistence has declined, (2) the Phillips‐curve has flattened and (3) inflation has become less responsive to other shocks. These changes in inflation dynamics are interpreted as resulting from an anchoring of inflation expectations as a result of better monetary policy. The paper then goes on to draw implications for monetary policy from this interpretation, as well as implications for inflation forecasts.