Inflation Dynamics and Subjective Expectations in the United States

13 Pages Posted: 12 Jan 2011

See all articles by Klaus Adam

Klaus Adam

University of Mannheim; European Central Bank (ECB) - Department of Research; Centre for Economic Policy Research (CEPR)

Mario Padula

University "Ca' Foscari" of Venice; CSEF

Multiple version iconThere are 2 versions of this paper

Date Written: September 20, 2010

Abstract

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.

JEL Classification: (JEL E31)

Suggested Citation

Adam, Klaus and Padula, Mario, Inflation Dynamics and Subjective Expectations in the United States (September 20, 2010). Economic Inquiry, Vol. 49, Issue 1, pp. 13-25, 2010. Available at SSRN: https://ssrn.com/abstract=1738136 or http://dx.doi.org/10.1111/j.1465-7295.2010.00328.x

Klaus Adam (Contact Author)

University of Mannheim ( email )

Department of Economics
L7 ,3-5
Mannheim, 68131
Germany

HOME PAGE: http://adam.vwl.uni-mannheim.de/1528.0.html

European Central Bank (ECB) - Department of Research ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany
+49 69 1344 6597 (Phone)

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Mario Padula

University "Ca' Foscari" of Venice ( email )

Dorsoduro 3246
Venice, Veneto 30123
Italy
+390412349181 (Phone)
+390412349176 (Fax)

CSEF

Via Don Melillo I
Fisciano, Salerno, 84084
Italy

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