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Explaining the Recent Behavior of Inflation and Unemployment in the United States
Author:
Mr. Vincent Hogan null

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Series:
IMF Working Papers
Volume/Issue:
Volume 1998: Issue 145
Language:
English
Publication Date:
01 Sep 1998
DOI:
https://doi.org/10.5089/9781451856514.001
ISBN:
9781451856514
ISSN:
1018-5941
Pages:
17
Keywords:
WP; natural rate of unemployment; Phillips curve; variable; inflation variable; overpredicts inflation; Inflation; inflation performance; overpredict inflation; reason inflation; unemployment gap; NAIRU equation; Import prices; Unemployment; Unemployment rate; Labor costs
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund