The Dynamics of UK and US Ination Expectations
نویسندگان
چکیده
This paper investigates the relationship between short term and long term ination expectations in the US and the UK with a focus on ination pass through (i.e. how changes in short term expectations a¤ect long term expectations). An econometric methodology is used which allows us to uncover the relationship between ination pass through and various explanatory variables. We relate our empirical results to theoretical models of anchored, contained and unmoored ination expectations. For neither country do we nd anchored or unmoored ination expectations. For the US, contained ination expectations are found. For the UK, our ndings are not consistent with the speci c model of contained ination expectations presented here, but are consistent with a more broad view of expectations being constrained by the existence of an ination target. The views expressed in this paper are those of the authors and do not necessarily reect the views of the Federal Reserve Bank of New York or the Federal Reserve System. Gary Koop is a Fellow of the Rimini Center for Economic Analysis.
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