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Evolving Reputation for Commitment: The Rise, Fall and Stabilization of US Inflation / Robert G. King, Yang K. Lu.
- Format:
- Book
- Author/Creator:
- King, Robert G.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w30763.
- NBER working paper series no. w30763
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2022.
- Summary:
- A parsimonious model of shifting policy regimes can simultaneously capture expected and actual US inflation during 1969-2005. Our model features a forward-looking New Keynesian Phillips curve and purposeful policymakers that can or cannot commit. Private sector learning about policymaker type leads to a reputation state variable. We use model inflation forecasting rules to extract state variables from SPF inflation forecasts. US inflation is tracked by optimal policy without commitment before 1981 and by optimal policy with commitment afterward. In theory and quantification, the interaction of private sector learning and optimal policy within regimes is central to expected and actual inflation.
- Notes:
- Print version record
- December 2022.
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