Working Paper
Inflation as a Fiscal Limit
Melosi, Leonardo; Bianchi, Francesco (2022-29-08)
Low and stable inflation requires an appropriate fiscal framework aimed at stabilizing government debt. Historically, trend inflation is critically influenced by actual or perceived changes to this framework, while cost-push shocks only account for short-lasting movements in inflation. Before the pandemic, a moderate level of fiscal inflation has counteracted deflationary pressures, helping the central bank to avoid deflation. The recent fiscal interventions in response to the Covid pandemic have altered the private sector’s beliefs about the fiscal framework, accelerating the recovery, but ...
Working Paper Series , Paper WP 2022-37

Working Paper
Reverse Kalman filtering U.S. inflation with sticky professional forecasts
Smith, Gregor W.; Nason, James M. (2013)
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 studies of US inflation history and is of interest partly because the trend may be viewed as the Fed?s evolving inflation target or long-horizon expected inflation. The sluggish reporting attributed to ...
Working Papers , Paper 13-34

Working Paper
Measuring the level and uncertainty of trend inflation
Mertens, Elmar (2011)
Firmly-anchored inflation expectations are widely viewed as playing a central role in the successful conduct of monetary policy. This paper presents estimates of trend inflation, based on information contained in survey expectations, the term structure of interest rates, and realized inflation rates. My application combines a variety of data sources at the monthly frequency and it can flexibly handle missing data arising from infrequent observations and limited data availability. In order to assess whether inflation expectations are anchored, uncertainty surrounding future changes in trend ...
Finance and Economics Discussion Series , Paper 2011-42

Journal Article
How do benefit adjustments for government transfer programs compare with their participants' inflation experiences?
Paulson, Anna L.; McGranahan, Leslie (2011-10)
The authors measure the inflation experienced by demographic groups that likely received benefits from major government transfer programs during the period 1980?2010. They then compare the group-specific inflation measures with the transfer programs? benefit adjustments, which are typically based on aggregate inflation. The extent to which the program benefits keep up with group inflation differs across the programs and their targeted groups, depending on both the ways in which the benefits are adjusted for price changes and the spending patterns of the various groups.
Economic Perspectives , Volume 35 , Issue Q IV

Working Paper
Are long-run inflation expectations anchored more firmly in the Euro area than in the United States?
Levin, Andrew T.; Beechey, Meredith J.; Johannsen, Benjamin K. (2008)
This paper compares the recent evolution of long-run inflation expectations in the euro area and the United States, using evidence from financial markets and surveys of professional forecasters. Survey data indicate that long-run inflation expectations are reasonably well-anchored in both economies, but also reveal substantially greater dispersion across forecasters' long-horizon projections of U.S. inflation. Daily data on inflation swaps and nominal-indexed bond spreads--which gauge compensation for expected inflation and inflation risk--also suggest that long-run inflation expectations are ...
Finance and Economics Discussion Series , Paper 2008-23