Inflation, Expectations and Growth in Real Money in the United States
نویسنده
چکیده
This paper aims to explain the change in the rate of inflation within the United States economy by following a new Classical–Keynesian synthesis view and by incorporating private inflation expectations directly into the inflation determination process. A parsimonious unrestricted VAR approach is adopted to expose the longrun solution that is subsequently included in an error-correction model with the short-run dynamics. The empirical results reveal the full efficiency in private inflation expectations formation and support for the Classical Quantity Theory mechanism of inflation determination in the long run.
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