Low inflation was once a welcome to both policy makers and the public. However, Japan's experience during 1990's changed consensus view on price of economists central banks around world. Facing deflation zero interest bound at same time, Bank Japan had difficulty in conducting effective monetary policy. It made stagnation unusually prolonged. Too low which annoys today is translated into "Phill...

THE AMERICAN ECONOMY of the mid-1990s has been a source of envy for the world and of puzzlement for macroeconomists. The civilian unemployment rate has remained below 5 percent for one year and below 6 percent for almost four years. Despite near universal forecasts in 1994 of accelerating inflation that would accompany a dip of the unemployment rate below 6 percent, inflation actually decelerat...

Levels of unemployment is great concern to policy makers in most world economies. Many models have been developed address the problem but no clear solution has found. Closely related inflation. Stagflation, a condition where both and inflation are high at same time resulted ineffectiveness policies issued by monetary authorities Kenya. Solutions challenges experienced many The purpose this stud...

Using quarterly macro data and annual state panel data, we examine various explanations of the low rate of price inflation, strong real wage growth, and low rate of unemployment in the U.S. economy during the late 1990s. Many of these explanations imply shifts in the coefficients of price and wage Phillips curves. We find, however, that once one accounts for the univariate trends in the unemplo...

This paper proposes two new weighting schemes that average forecasts using different estimation windows to account for structural change. We let the weights reflect the probability of each time point being the most-recent break point, and we use the reversed ordered Cusum test statistics to capture this intuition. The second weighting method simply imposes heavier weights on those forecasts tha...

We are in the midst of a structural boom the force of which has not been seen in this country since the 1920s. After the U.S. unemployment rate hit 6 per cent in late 1994, following its two-year recovery, many experts assumed that unemployment had regained its natural-rate path. 1 The natural unemployment rate in the second half of the 1980s had been put at around 6.5 per cent in several estim...