Top central bankers admit inflation models fell short
Reliance on Phillips curve and demand-driven models may have created blind spots
The analytical tools central banks use to understand inflation contain flaws that may have limited their usefulness in tracking surging prices over the past year, senior officials said today (June 29).
Jerome Powell, chair of the US Federal Reserve, said the Phillips curve that sits at the heart of many central bank models was “just not capable” of producing high inflation predictions.
“I think we now understand better how little we understand about inflation,” Powell said, speaking at the
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@centralbanking.com or view our subscription options here: http://subscriptions.centralbanking.com/subscribe
You are currently unable to print this content. Please contact info@centralbanking.com to find out more.
You are currently unable to copy this content. Please contact info@centralbanking.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@centralbanking.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@centralbanking.com
More on Macroeconomics
South European states benefited most from NGEU – ECB
Recovery and resilience facility’s structural reforms expected to pay off in the long run
NBER paper offers ‘unified theory’ of liquidity traps
Researchers ask whether major economies are doomed to return to zero lower bound
No systemic link between dollar and oil price yet – ECB paper
Increasing value of crude no longer weakens greenback, but does not “significantly” lift currency
Governors weigh macroeconomic risks at G30 event
Officials from Netherlands, South Africa, BIS and more consider debt, inflation and climate change
Differences in eurozone states ‘support disinflation narrative’
BdF deputy governor confident inflation will keep falling based on wage developments
‘Pooling’ models generates better output gap estimates – paper
Economists say measuring gap in real time is particularly challenging in developing countries
Trade credit can expose firms to FX risk – BIS paper
Currency borrowers partially insulate their partners from shocks, but still pass them along supply chains
Hélène Rey on cracking the code to the global financial cycle
The dollar and financial cycle move together. For the first time, economists think they know why