We provide a new way to filter US inflation into trend and cycle components, based on extracting long-run forecasts from the Survey of Professional Forecasters. We operate the Kalman filter in reverse, beginning with observed forecasts, then estimating parameters, and then extracting the stochastic trend in inflation. The trend-cycle model with unobserved components is consistent with numerous ...

This paper explores the theoretical foundations of a new approach to monetary policy. Proponents of this approach hold that when inflation is moderate but still above the long-run objective, the Fed should not take deliberate anti-inflation action, but rather should wait for external circumstances—such as favorable supply shocks and unforeseen recessions—to deliver the desired reduction in infl...

Evidence of smooth transition autoregressive (STAR) representations is found in two, out of three, time series of different measures of annual inflation in Colombia during this decade for monthly data. The STAR-type nonlinearities are asymmetric for inflation computed as the variation of CPI while for (a measure of ) core inflation are symmetric. Thus, LSTAR and ESTAR models were, respectively,...

2. Inflation and Unemployment during Recessions (mean change from beginning of recession, quarterly data) Despite large rises in unemployment during the Great Recession, inflation has been remarkably stable in almost all advanced economies. This is different from the recessions in the 1970s and 1980s, when inflation fell much more when unemployment rose. Figure 3.1. The Behavior of Inflation Ha...

We consider non-tachyonic hybrid inflation in the context of the braneworld cosmology. When one considers models for brane inflation, hybrid inflation is a natural consequence of the tachyon condensation if it appears at the end of inflation. In this case, however, reheating is a difficult problem due to the peculiar properties of the tachyon. In this paper we show some models for brane inflati...

This paper examines the theory of the Phillips curve, focusing on the distinction between “formation” of inflation expectations and “incorporation” of inflation expectations. Phillips curve theory has largely focused on the former. Explaining the Phillips curve by reference to expectation formation keeps Phillips curve theory in the policy orbit of natural rate thinking where there is no welfar...

We argue that there are conditions such that any inflation targeting regime is preferable to full policy discretion, even if long-run inflation rates are identical across regimes. The key observation is that strict inflation targeting outperforms the discretionary policy response to sufficiently persistent shocks. Under full policy discretion, inflation expectations over the medium term respond...

This paper examines the welfare implications of managing asset-price with consumer-price inflation targeting by monetary authorities who have to learn the laws of motion for both inflation rates. The central bank can reduce the volatility of consumption as well as improve welfare more effectively if it adopts state-contingent Taylor rules aimed at inflation and Qgrowth targets in this learning ...

It is usually supposed that inflation is of the slow-roll variety, and that the inflaton generates the primordial curvature perturbation. According to the curvaton hypothesis, inflation need not be slow-roll, and if it is the inflaton generates a negligible curvature perturbation. We find that the construction of slow-roll inflation models becomes much easier under this hypothesis. Also, therma...

We provide a pedagogical overview of inflation in string theory. Our theme is the sensitivity of inflation to Planck-scale physics, which we argue provides both the primary motivation and the central theoretical challenge for the subject. We illustrate these issues through two case studies of inflationary scenarios in string theory: warped D-brane inflation and axion monodromy inflation. Finall...