Explaining the Recent Behavior of Inflation and Unemployment in the United States

Download or read book Explaining the Recent Behavior of Inflation and Unemployment in the United States written by Mr.Vincent Hogan and published by International Monetary Fund. This book was released on 1998-09-01 with total page 18 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.