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Discussion Paper
Did the Fed's Announcement of an Inflation Objective Influence Expectations?
Economic theory suggests that inflation expectations are a key determinant of actual inflation.
Discussion Paper
Residual Seasonality in Core Consumer Price Inflation
The past 10 years have typically seen a pattern in which consumer price inflation has tended to be higher in the first half of the year than in the second half.
Working Paper
Perceptions and Expectations of Inflation by U.S. Households
To better understand inflation expectations, we examine newly available data on U.S. households' inflation perceptions-what people think inflation has been in the past. The overarching summary is that inflation perceptions look similar to inflation expectations. The central tendencies of the responses for perceived inflation over the past five to ten years are similar to those of expected inflation for the next five to ten years, and all are a little above official estimates of inflation. Thus, survey respondents overall do not expect long-term inflation to change in the future relative to ...
Working Paper
Factor intensity and price rigidity: evidence and theory
This paper establishes a new empirical finding: the degree of labor intensity and the degree of price flexibility are negatively correlated across industrial sectors. I model this in an economy with staggered nominal wage contracts and production sectors that differ in labor and capital intensities. Nominal disturbances affect capital-intensive and labor-intensive sectors asymmetrically: prices of labor-intensive goods change less than do prices of capital-intensive goods. In addition, when prices are costly to adjust, more firms in the capital-intensive sectors optimally choose to update ...
Discussion Paper
Will Household Expectations Follow Professional Forecasters'?
In January 2012 the FOMC announced an explicit 2 percent objective for inflation as measured by the price index for Personal Consumption Expenditures (PCE).
Working Paper
Retrospective on the Federal Reserve Board Staff's Inflation Forecast Errors since 2019
This paper examines the Board staff's inflation forecast misses over the years following the COVID-19 outbreak, focusing on a timeline of what staff members knew when and lessons learned along the way. The staff significantly underestimated both the size and persistence of the inflationary surge that followed the reopening of the U.S. economy. As a result, staff members made various changes to their forecasting procedures, including using new types of data to inform their assessment of supply-demand imbalances in product and labor markets and to guide their judgmental forecast. Throughout, an ...