Inflation Dynamics and Subjective Expectations in the United States

Download or read book Inflation Dynamics and Subjective Expectations in the United States written by Klaus Adam and published by . This book was released on 2011 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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 non-reoptimizing firms, we obtain significant parameter estimates of the sign predicted by theory independently of the marginal cost measure used.