This paper estimates the effects of oil price changes on U.S. inflation in a Phillips curve framework, allowing for some of the asymmetries, nonlinearities, and structural breaks that have been found in the literature on the real effects of oil price shocks. It finds that since around 1980, oil price changes seem to affect inflation only through their direct share in a price index, with little ...

I n the United States, there are two broad indexes of consumer prices: the consumer price index, or CPI, and the chain price index for personal consumption expenditures, or PCEPI. Because the indexes are similar in many respects, the inflation rates measured with them often move in parallel. There are, however, some important differences, which, at times, can lead to large gaps between CPI and ...

We show that US consumer inflation expectations are formed using a variant of adaptive expectations proposed by Mankiw et al. (2004). In particular, expectations behave differently when food and energy prices rise sharply relative to other prices. Using the recently proposed test of Homm and Breitung (2012), we analyze the 1982–2010 period and identify seven periods where the headline price ind...

N recent years, many countries have experienced “stagflation,” a period of high and rising inflation and unemployment. Over this time, higher inflation increasingly has come to be blamed for higher unemployment and reduced growth of real output. This contrasts sharply with previously held notions that there was either a long-run tradeoff between inflation and unemployment or a “natural rate of ...

For long periods since 1982, core inflation has behaved as if it were generated by a process with a fixed mean and serially independent error term. Nonparametric changepoint tests proposed by Pettitt (1979) and Lombard (1987) suggest that since 1982, changes in core inflation have been infrequent and rather abrupt. However, little is known about the small-sample properties, the power of the tes...

This paper focuses on modeling and forecasting inflation in India using an augmented Phillips curve framework. Both demand and supply factors are seen as drivers of inflation. Demand conditions are found to have a stronger impact on non-food manufactured products (NFMP) inflation vis-a-vis headline wholesale price inflation; moreover, NFMP inflation is found to be more persistent than headline ...