Do Asymmetric Central Bank Preferences Help ExplainObserved Inflation Outcomes?

Recent theoretical work shows that changes in the volatility of inflation and/or unem-ployment affect equilibrium in°ation outcomes when the central banker's loss functionis asymmetric. We show that previous evidence offered in support of the propositionthat the volatility of unemployment helps explain inflation outcomes suffers from a spu-rious regression problem. Once this problem is controlled for, the evidence suggeststhat the volatility of unemployment does not help explain inflation outcomes. Thereis some evidence of a relationship between inflation and its volatility, but the data isnot strongly supportive of the view that asymmetric central bank preferences are animportant driver of inflation.[...]