Explaining the Recent Behavior of Inflation and Unemployment in the United States

17 Pages Posted: 15 Feb 2006

See all articles by Vincent Hogan

Vincent Hogan

National University of Ireland - University College Dublin; University of Warwick

Date Written: September 1998

Abstract

Low rates of inflation have been recorded in recent years, despite a decline in the unemployment rate. This phenomenon could be the result of a series of transitory shocks or of a permanent change in the structure of the economy leading to a lower NAIRU. The paper suggests that, while the NAIRU may have fallen slightly, it has not fallen by an amount sufficient to explain the recent behavior of inflation. A leading explanation for recent inflation performance appears to be favorable price shocks; in particular, the cost of imports has fallen sharply as the dollar has appreciated.

Keywords: Inflation, Phillips Curve

JEL Classification: E31, E37

Suggested Citation

Hogan, Vincent, Explaining the Recent Behavior of Inflation and Unemployment in the United States (September 1998). IMF Working Paper, Vol. , pp. 1-17, 1998. Available at SSRN: https://ssrn.com/abstract=882715

Vincent Hogan (Contact Author)

National University of Ireland - University College Dublin ( email )

Dublin 4
Ireland
+353 1 716 8300 (Phone)
+353 1 283 0068 (Fax)

University of Warwick

Gibbet Hill Rd.
Coventry, West Midlands CV4 8UW
United Kingdom

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