Accounting for Post-Crisis Inflation and Employment: A Retro Analysis / Chiara Fratto, Harald Uhlig.

Format:

Book

Author/Creator:

Fratto, Chiara.

Contributor:

National Bureau of Economic Research.

Uhlig, Harald.

Series:

Working Paper Series (National Bureau of Economic Research) no. w20707.

NBER working paper series no. w20707

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Accounting for Post-Crisis Inflation and Employment

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2014.

Summary:

What accounts for inflation after 2008? We use the prominent pre-crisis Smets-Wouters (2007) model to address this question. We find that due to price markup shocks alone inflation would have been 1% higher than observed and 0.5% higher that the long-run average. Their standard deviation is similar to its pre-crisis level. Price markup shocks were also responsible for the slow recovery of employment, though not for the initial drop. Monetary policy shocks predict an inflation rate 0.5% below average. Government expenditure innovations do not contribute much either to inflation or to employment dynamics.

Notes:

Print version record

November 2014.