Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/229049
Authors: 
Del Negro, Marco
Lenza, Michele
Primiceri, Giorgio E.
Tambalotti, Andrea
Year of Publication: 
2020
Series/Report no.: 
ECB Working Paper No. 2435
Abstract: 
The business cycle is alive and well, and real variables respond to it more or less as they always did. Witness the Great Recession. In ation, in contrast, has gone quiescent. This paper studies the sources of this disconnect using VARs and an estimated DSGE model. It finds that the disconnect is due primarily to the muted reaction of inflation to cost pressures, regardless of how they are measured - a flat aggregate supply curve. A shift in policy towards more forceful inflation stabilization also appears to have played some role by reducing the impact of demand shocks on the real economy. The evidence rules out stories centered around changes in the structure of the labor market or in how we should measure its tightness.
Subjects: 
Infllation
unemployment
monetary policy trade-off
VARs
DSGE models
JEL: 
E31
E32
E37
E52
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-4078-8
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.