In this empirical paper, we take a close look at the impact of observed changes in the product market regulation, which raises barriers to entry and empediments to competition, on inflation dynamics since the early 1980s. We use an enlarged new Keynesian Phillips curve (NKPC) allowing for entry of firms and for increasing competitive pressures with the number of firms and non zero trend inflati...

Most studies on U.S. inflation forecasting have focused on predicting the mean inflation using time series and Phillips Curve (PC) models. The findings indicate that using real economic indicators (such as unemployment or the output gap) improve out-of-sample forecasting performance during the late 1970s and the first half of the 1980s. But after 1985, PC based forecasts do not lead to forecast...

We use the inflation premium—the difference between nominal and real interest rates—as a proxy for expected inflation in the context of the New Keynesian Phillips Curve. Using data from inflation-indexed and nominal bonds we estimate a forward-looking Phillips curve for the United Kingdom over the period 1985-2004. The proposed model describes UK inflation dynamics considerably better than does...

I develop an extension of the standard New Keynesian model to monetary policy regime switching to study the impact of uncertainty around the future inflation target. First, I fully characterize how the responses of current inflation and output to inflation target uncertainty depend on the monetary policy rule. If monetary policy is passive, inflation may increase far beyond the anticipated incr...

I develop an extension of the standard New Keynesian model to monetary policy regime switching to study the impact of uncertainty around the future inflation target. First, I fully characterize how the responses of current inflation and output to inflation target uncertainty depend on the monetary policy rule. If monetary policy is passive, inflation may increase far beyond the anticipated incr...

The recent macroeconomic literature stresses the importance of managing heterogeneous expectations in the formulation of monetary policy. We use a simple frictionless dynamic stochastic general equilibrium (DSGE) model to investigate inflation dynamics under alternative interest rate rules when agents have heterogeneous expectations, and update their beliefs based on past performance, as in Bro...