US Inflation And Inflation Uncertainty In A Historical Perspective: The Impact Of Recessions

The authors use over two hundred years of US inflation data to examine the impact of inflation uncertainty on inflation. An analysis of the full period without allowing for various regimes shows no impact of uncertainty on inflation. However, once they distinguish between recessions and non recessions, they find that inflation uncertainty has a negative effect on inflation only in recession times, thus providing support to the Holland hypothesis. The relationship between inflation and inflation uncertainty has drawn significant attention in the empirical macroeconomic literature recently. Macroeconomic theory predicts a bidirectional causal relationship.

Provided by: University of Macedonia Topic: CXO Date Added: Dec 2010 Format: PDF

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