Access the full text.
Sign up today, get DeepDyve free for 14 days.
Jeffrey Fuhrer (1997)
The [un]importance of forward-looking behavior in price specificationsJournal of Money, Credit and Banking, 29
Ulrike Malmendier (2019)
Inflation expectations
R. Fair (2000)
Testing the NAIRU Model for the United StatesReview of Economics and Statistics, 82
(2021)
The Biden Stimulus is Admirably Ambitious. But It Brings Some Big Risks, Too
(2018)
Macroeconometric Modeling: 2018, fairm
R. Fair (2019)
Variable Mismeasurement in a Class of DSGE Models: CommentYale: Cowles Foundation Working Papers
Olivier Coibion, Y. Gorodnichenko, Saten Kumar, Mathieu Pedemonte (2018)
Inflation Expectations as a Policy Tool?Econometric Modeling: Macroeconomics eJournal
Bernardo Candia, Olivier Coibion, Y. Gorodnichenko (2021)
The Inflation Expectations of U.S. Firms: Evidence from a new surveySSRN Electronic Journal
R. Fair (2019)
Some Important Macro PointsComparative Political Economy: Comparative Capitalism eJournal
Columns (6) and (7) use GAP and 1/(GAP + .07). The forecast values using GAP are slightly higher than those using U R, although the forecasts using
This paper uses an econometric approach to examine the inflation consequences of the American Rescue Plan Act of 2021. Price equations are estimated and used to forecast future inflation. The main results are: (1) The data suggest that price equations should be specified in level form rather than in first or second difference form. (2) There is some slight evidence of nonlinear demand effects on prices. (3) There is no evidence that demand effects have gotten smaller over time. 4) The stimulus from the act combined with large wealth effects from past household saving, rising stock prices, and rising housing prices is large and is forecast to drive the unemployment rate down to below 3.5 percent by the middle of 2022. 5) Given this stimulus, the inflation rate is forecast to rise to slightly under 5 percent by the middle of 2022 and then comes down slowly. 6) There is considerable uncertainty in the point forecasts, especially two years out. The probability that inflation will be larger than 6 percent next year is estimated to be 31.6 percent. 7) If the Fed were behaving as historically estimated, it would raise the interest rate to about 3 percent by the end of 2021 and 3.5 percent by the end of 2022 according to the forecast. This would lower inflation, although slowly. By the middle of 2022 inflation would be about 1 percentage point lower. The unemployment rate would be 0.5 percentage points higher.
Business Economics – Springer Journals
Published: Jun 2, 2021
Keywords: Price equations; Inflation; Fed policy
Read and print from thousands of top scholarly journals.
Already have an account? Log in
Bookmark this article. You can see your Bookmarks on your DeepDyve Library.
To save an article, log in first, or sign up for a DeepDyve account if you don’t already have one.
Copy and paste the desired citation format or use the link below to download a file formatted for EndNote
Access the full text.
Sign up today, get DeepDyve free for 14 days.
All DeepDyve websites use cookies to improve your online experience. They were placed on your computer when you launched this website. You can change your cookie settings through your browser.