E31

Damien Capelle · Yang Liu

This paper analyzes the effectiveness of a tax on inflation policy (TIP)—a fiscal instrument that would require firms to pay a tax proportional to the increase in their prices—as a complement to …

John H. Cochrane

Cochrane asks whether U.S. postwar inflation can be understood using a "frictionless" fiscal theory of the price level -- in which the price level is pinned down by the government's intertemporal …

Atif Mian · Ludwig Straub · Amir Sufi

This paper develops a tractable continuous-time model to study the fiscal sustainability of government deficits and the joint dynamics of public debt, with two main ingredients: an endogenous interest …

Marco Bassetto · David S Miller

Why do sudden inflations and currency crises occur, while symmetric sudden deflations never do? The paper asks whether treating nominal government bonds as analogous to ordinary corporate bonds — with …

Joel P. Flynn · George Nikolakoudis · Karthik A. Sastry

Modern macroeconomic models of aggregate supply universally restrict firms to price-setting — committing to a price and supplying whatever quantity the market demands. Flynn, Nikolakoudis, and Sastry …

Marco Errico · Danial Lashkari

Errico and Lashkari address two intertwined problems in the measurement of aggregate price indices: how to account for quality change and variety entry/exit when the demand system is not CES, and how …

Luca Gagliardone · Mark Gertler · Simone Lenzu · Joris Tielens

This paper addresses a fundamental puzzle in macroeconomics: why do estimates of the New Keynesian Phillips curve (NKPC) slope differ sharply depending on whether real marginal cost or the output gap …

Ippei Fujiwara · Kiminori Matsuyama

Fujiwara and Matsuyama ask whether the well-documented flattening of the New Keynesian Phillips curve (NKPC) and the concurrent rise in market concentration and markup rates are causally linked or …

Fernando Alvarez · Katarína Borovičková · Robert Shimer

This paper asks two related questions. First, can one develop a robust, distribution-free estimator for the discrete-time mixed proportional hazard (MPH) model of duration with unobserved …

Emil Holst Partsch · Ivan Petrella · Emiliano Santoro

Consumer durables account for a disproportionately large share of household expenditure fluctuations despite their small share of total private consumption. Two stylized facts motivate the paper: (1) …

Jonathan Payne · Bálint Szőke · George Hall · Thomas J Sargent

This paper constructs a new dataset of US federal bond prices and uses it to estimate the full term structure of yields on gold-denominated US federal debt from 1791 to 1933 — the entire gold standard …

John H. Cochrane

Cochrane argues that the standard new-Keynesian account of how a Taylor rule pins down inflation is incomplete -- it works only by assuming the government will follow policies that amount to a threat …

Michael McLeay · Silvana Tenreyro

An emerging view in international macroeconomics contends that dollar invoicing of exports renders monetary policy ineffective for non-U.S. countries: because export prices are allegedly sticky in …

Timothy Cogley · Thomas J. Sargent

This 2005 Review of Economic Dynamics paper by Timothy Cogley and Thomas J. Sargent extends their earlier Cogley-Sargent (2001) time-varying-parameter VAR (TVP-VAR) of postwar U.S.

Òscar Jordà · Sharon Kozicki

This 2011 International Economic Review paper by Óscar Jordà and Sharon Kozicki proposes "projection minimum distance" (PMD), a two-step semiparametric estimator for macroeconomic models whose …

Jeffery D. Amato · Thomas Laubach

Adding habit formation in consumption to an optimising sticky-price model changes both the IS curve and the Phillips curve, makes the variance of output itself -- not only the output gap -- …

Matthias Doepke · Martin Schneider

Using Flow-of-Funds and Survey-of-Consumer-Finances data to reconstruct market-value nominal asset and liability positions -- including their maturity structure -- across U.S. sectors and household …

Robert E. Lucas, Jr.

Surveying and extending the Bailey-Friedman tradition of estimating the welfare cost of inflation, Lucas fits U.S. money-demand data for 1900-1994 and estimates that reducing annual inflation from 10 …

Fernando Alvarez · Robert E. Lucas · Warren E. Weber

Reconciling the consensus view that raising short rates fights inflation with the quantity-theoretic evidence that inflation and interest rates move together with money growth in the long run, this …

Thomas J. Sargent · Joseph Zeira

Israeli inflation jumped from 130% to 400% in October 1983 with no contemporaneous rise in the government deficit; Sargent and Zeira attribute the jump to the government's announced bailout of …

Olivier Blanchard · Jordi Galí

A New Keynesian model is extended with hiring costs that rise in labour market tightness and with real wage rigidity, so that unemployment exists and moves. Under the paper's utility specification the …

Max Diegel · Dieter Nautz

This 2021 Journal of Economic Dynamics & Control paper by Max Diegel and Dieter Nautz asks whether U.S. long-term inflation expectations respond to monetary policy shocks in a way consistent with a …

Thomas J. Sargent · François R. Velde

Interpreting the French Revolution through the lens of government-budget-constraint theory, this paper traces how a pre-1789 fiscal crisis, the assignat's evolution from tax-backed money into fiat …

Maximilian Schröder

This paper introduces a Bayesian Gaussian mixture density regression framework that estimates the complete forecast distribution of inflation — not just selected quantiles — and decomposes the entire …

George J. Bratsiotis · Kasun D. Pathirage

This paper introduces a four-agent estimated New Keynesian DSGE model—comprising banked simple households, underbanked simple households, firm owners, and bank owners—to examine agent-specific and …

Florin O. Bilbiie

THANK, a tractable heterogeneous-agent New Keynesian model built around a single statistic for the cyclicality of income inequality, shows that the conditions needed for HANK-style amplification of …

Sandra Daudignon · Oreste Tristani

This paper analyzes how monetary policy should respond to a long-run natural interest rate that can drift permanently — following a bounded random walk with upper bound 3 percent and lower bound 0 …

William Poole

This 1988 Journal of Economic Perspectives paper by William Poole is a survey and analytical essay -- not a structural estimation exercise with a formal identification strategy -- that draws lessons …

Luis G. Hernández-Román

This paper employs a proxy structural VAR model to examine the effects of global supply chain (GSC) shocks on U.S. macroeconomic variables and the Federal Reserve's historical response, and evaluates …

Sebastian Schmidt

The paper builds a discrete-time DSGE model with Calvo sticky prices in which the public sector has two feedback rules that can hit corners, generating endogenous shifts between an "orthodox" regime …

John H. Cochrane

Cochrane argues that the fiscal theory of the price level rests on a valuation equation, not a budget constraint -- nominal government debt is priced like a claim on future government surpluses, …

Peter Andre · Ingar Haaland · Christopher Roth · Mirko Wiederholt · Johannes Wohlfart

This paper investigates two related empirical questions in the context of the historic surge in US inflation in late 2021 and 2022: (1) What narratives—causal stories—do people invoke to explain why …

Robert E. Lucas, Jr.

Lucas's 1995 Nobel Prize lecture asks why changes in the quantity of money seem, from David Hume onward, to be both neutral "units changes" in the long run and yet a source of real stimulus or …

Sushant Acharya · Edouard Challe · Keshav Dogra

An analytically tractable heterogeneous-agent New Keynesian (HANK) model in which a utilitarian planner's optimal monetary policy departs from the representative-agent benchmark because interest rates …

Christopher J. Erceg · Dale W. Henderson · Andrew T. Levin

In an optimizing-agent model where both wages and prices are set in staggered Calvo contracts, monetary policy cannot reach the allocation that would prevail under fully flexible wages and prices, …

Thomas Drechsel

This paper combines a hand-collected archival data set of over 800 personal interactions between U.S. Presidents and Federal Reserve officials from 1933 to 2016 with a narrative structural VAR to …

Gabriel Ehrlich · John Haltiwanger · Ron Jarmin · David Johnson · Ed Olivares · Luke Pardue · Matthew D. Shapiro · Laura Yi Zhao

This paper implements and evaluates methods for constructing quality-adjusted price indices from item-level retail scanner data at scale — across hundreds of product categories, heterogeneously …

Markus Haavio · Joni Heikkinen · Pirkka Jalasjoki · Juha Kilponen · Maritta Paloviita · Ilona Vänni

This paper estimates the European Central Bank's loss function directly rather than inferring it from a reaction function, using the tone of the Governing Council's press conference introductory …

Olivier Blanchard · Jordi Galí

The standard New Keynesian model implies that stabilising inflation also stabilises the welfare-relevant output gap -- a property the authors name the "divine coincidence" and trace to the absence of …

Ojasvita Bahl · Chetan Ghate · Debdulal Mallick

Governments in emerging market and developing economies (EMDEs) routinely intervene in agricultural markets — procuring grain and redistributing it to poor households — in response to food price …

Henrique S. Basso · Omar Rachedi

Basso and Rachedi investigate how robot adoption influences inflation dynamics — specifically, whether the surge in automation during the 2000s and 2010s can explain the muted sensitivity of inflation …

Tom D. Holden

The paper proposes and analyzes real rate rules — monetary policy rules of the form i_t = r_t + φπ_t (φ > 1), where r_t is the current-period real interest rate observed via TIPS yields or inflation …

Jeffery D. Amato · Thomas Laubach

Letting a fraction of consumers and price setters replace optimisation with a backward-looking rule of thumb adds endogenous persistence to output and inflation, changes how shocks travel through a …

James Bullard · Alex Grimaud · Isabelle Salle · Gauthier Vermandel

Why did the 2021–2023 US inflation surge end in a soft landing — disinflation without a major recession — while the Volcker disinflation of 1979–1987 required substantial output losses? And was the …

Thomas J. Sargent · Neil Wallace

Sargent and Wallace show that even in a fully monetarist economy, a monetary authority that tightens money today while an independent fiscal authority's deficits are taken as given must finance the …

Guillermo A. Calvo

This 1983 Journal of Monetary Economics paper by Guillermo Calvo builds a model of staggered price-setting that is more analytically tractable than the earlier discrete-contract-length models of …

Christopher A. Sims

Against the standard narrative that only monetary policy errors could have caused or prevented the 1970s US inflation, Sims documents dramatic swings in US fiscal stance over the period and shows, in …

V. V. Chari · Patrick J. Kehoe · Ellen R. McGrattan

Staggered price-setting was long hoped to turn a short spell of exogenous price stickiness into a long spell of endogenous stickiness, and so into persistent output movements after a monetary shock. …

Thomas J. Sargent · Ulf Söderström

Summarizing Sargent's "The Conquest of American Inflation," this essay compares the popular rational-expectations "triumph of natural-rate theory" account of the rise and fall of U.S. inflation …

Ulf Söderström · Anders Vredin

Introducing Thomas Sargent's monograph "The Conquest of American Inflation" to a central-bank audience, this short essay contrasts the two standard accounts of the postwar rise and fall of inflation …

Thomas J. Sargent

This paper studies the abrupt endings of four post-World War I European hyperinflations -- in Austria, Hungary, Poland, and Germany -- arguing that each stopped suddenly and at a comparatively low …

N. Gregory Mankiw

The consensus view that contractionary monetary shocks raise unemployment but only slowly and gradually lower inflation is, this lecture argues, flatly inconsistent with the forward-looking "new …

S. Borağan Aruoba · Thomas Drechsel

This 2024 Journal of Monetary Economics paper by S. Borağan Aruoba and Thomas Drechsel asks why the aggregate U.S.

Marvin Goodfriend

Dividing 1987-2001 into six phases -- the post-crash inflation of 1987-90, the Gulf War disinflation, the celebrated 1994-95 preemptive tightening, the near-full-credibility long boom, the 1999-2000 …

A. W. Phillips

This paper tests, using nearly a century of British data (1861-1957), the hypothesis that the rate of change of money wage rates can be explained by the level of unemployment and the rate of change of …

Milton Friedman

Delivered as Friedman's presidential address to the American Economic Association in December 1967, this paper argues that two decades of professional opinion had swung too far toward assigning …

Richard Clarida · Jordi Galí · Mark Gertler

This widely cited survey derives monetary policy design from a simple forward-looking New Keynesian model, showing that optimal policy without commitment requires raising the nominal rate more than …

Timothy Cogley · Argia M. Sbordone

This 2008 American Economic Review paper by Timothy Cogley and Argia Sbordone asks whether the substantial persistence long observed in U.S. inflation reflects a genuine structural feature of …

Robert E. Lucas, Jr.

Using quarterly U.S. money, price, and interest-rate data smoothed with a two-sided exponentially weighted moving-average filter, Lucas shows that once high-frequency "business cycle" noise is …

John H. Cochrane

Using the government-debt valuation equation -- the requirement that the real value of outstanding government debt equal the present value of future primary surpluses -- this paper argues that after …