Home About Latest Browse RSS Advanced Search

Federal Reserve Bank of New York
Staff Reports
Do expected future marginal costs drive inflation dynamics?
Argia M. Sbordone

This article discusses a more general interpretation of the two-step minimum distance estimation procedure proposed in earlier work by Sbordone. The estimator is again applied to a version of the New Keynesian Phillips curve, in which inflation dynamics are driven by the expected evolution of marginal costs. The article clarifies econometric issues, addresses concerns about uncertainty and model misspecification raised in recent studies, and assesses the robustness of previous results. While confirming the importance of forward-looking terms in accounting for inflation dynamics, it suggests how the methodology can be applied to extend the analysis of inflation to a multivariate setting.

Download Full text
Download Full text
Cite this item
Argia M. Sbordone, Do expected future marginal costs drive inflation dynamics?, Federal Reserve Bank of New York, Staff Reports 204, 2005.
More from this series
JEL Classification:
Subject headings:
Keywords: Phillips curve ; Keynesian economics ; Econometric models ; Inflation (Finance)
For corrections, contact Amy Farber ()
Fed-in-Print is the central catalog of publications within the Federal Reserve System. It is managed and hosted by the Economic Research Division, Federal Reserve Bank of St. Louis.

Privacy Legal