Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/209791
Authors: 
Claussen, Carl Andreas
Staehr, Karsten
Year of Publication: 
2001
Series/Report no.: 
Working Paper No. 2001/2
Abstract: 
We study possible factors behind the subdued inflation in the United States since the mid-1990s. A standard expectations-augmented Phillips curve does not exhibit structural breaks. However, a wage-price spiral comprising wage growth, consumer price inflation and producer price inflation shows an otherwise unexplained downward shift in CPI inflation since the mid-1990s. We estimate this downward shift to be approximately 1 percentage point since 1994. The result emerges in spite of a large number of explanatory variables and seems to reflect deep structural changes of the economy. Counterfactual simulation of the wage-price spiral shows that the low level of U.S. inflation during the late 1990s stems from coincidental favourable shocks as well as factors that may reflect new economy developments.
Subjects: 
inflation
wage-price spiral
unemployment
productivity
JEL: 
C32
E31
E37
Persistent Identifier of the first edition: 
ISBN: 
82-7553-178-0
Creative Commons License: 
https://creativecommons.org/licenses/by-nc-nd/4.0/deed.no
Document Type: 
Working Paper
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