Supply shocks and the persistence of inflation

Arbeitspapier

This paper examines the long-run effects of supply shocks (such as oil shocks) on inflation in the United States. The persistence of supply shocks in U.S. inflation fell considerably during the period of Volcker's disinflation (1979-1982). My empirical results suggest that the difference between the pre-Volcker and post-Volcker periods is attributable to the change in the behavior of inflation expectations-agents expected shocks to persist in the pre-Volcker period, but not in the post-Volcker period. I construct a simple model of how different monetary policies lead to different persistence equilibria.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 485

Classification and Topics

• Classification: Wirtschaft ; Price Level; Inflation; Deflation ; Monetary Policy ; Central Banks and Their Policies ; Studies of Particular Policy Episodes
• Subject: inflation ; supply shocks ; inflation expectations ; persistence ; Great Inflation ; Gesamtwirtschaftliches Angebot ; Schock ; Inflation ; Inflationserwartung ; Schätzung ; USA

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Sommer, Martin
• Event: Veröffentlichung
• (who): The Johns Hopkins University, Department of Economics
• (where): Baltimore, MD
• (when): 2002

Further information

• Handle: http://hdl.handle.net/10419/72023
• Last update: 10.03.2025, 11:44 AM CET