Explaining the Recent Behavior of Inflation and Unemployment in the United States
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Summary:
Low rates of inflation have been recorded in recent years, despite a decline in the unemployment rate. This phenomenon could be the result of a series of transitory shocks or of a permanent change in the structure of the economy leading to a lower NAIRU. The paper suggests that, while the NAIRU may have fallen slightly, it has not fallen by an amount sufficient to explain the recent behavior of inflation. A leading explanation for recent inflation performance appears to be favorable price shocks; in particular, the cost of imports has fallen sharply as the dollar has appreciated.
Series:
Working Paper No. 1998/145
Subject:
Import prices Inflation Labor Labor costs Prices Unemployment Unemployment rate
English
Publication Date:
September 1, 1998
ISBN/ISSN:
9781451856514/1018-5941
Stock No:
WPIEA1451998
Pages:
17
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