inflation dynamics

Timothy Cogley
From The New Palgrave Dictionary of Economics, Second Edition, 2008
Edited by Steven N. Durlauf and Lawrence E. Blume
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Abstract

There have been a number of changes in monetary policy rules in the United States and UK since the early 1960s. The Lucas critique says that this should induce changes in the equilibrium law of motion. This article summarizes reduced-form evidence on the evolving law of motion for inflation in the USA and the UK. Since the 1970s, inflation has become lower on average, less volatile and less persistent. There is also less uncertainty about the central bank's long-run target for inflation.
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How to cite this article

Cogley, Timothy. "inflation dynamics." The New Palgrave Dictionary of Economics. Second Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2008. The New Palgrave Dictionary of Economics Online. Palgrave Macmillan. 31 October 2014 <http://www.dictionaryofeconomics.com/article?id=pde2008_I000272> doi:10.1057/9780230226203.0792

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