When inflation picks up, central banks are most concerned that the de-anchoring of inflation expectations and the … ignition of wage-price spirals will trigger inflation dynamic instability. However, such scenarios do not materialize in the … updated according to the actual inflation process, with indexed wages, and persistent inflation shocks. In these cases, a more …

We document that inflation risk in the U.S. varies significantly over time and is often asymmetric. To analyze the … direction of inflation risks. We perform counterfactual analyses using a quantitative general equilibrium model to evaluate the … implications of incorporating real-time estimates of the balance of inflation risks into monetary policy communications and …

household inflation expectations after accounting for professional forecasts and observable fundamentals. Using survey data, U … zero lower bound (ZLB), conditioning on household inflation uncertainty. The shock raises inflation, uncertainty, and … rise in inflation uncertainty dampens or can even reverse these effects. A New Keynesian model with belief shocks …

This paper studies the transition to high inflation during the COVID-19 pandemic, using a behavioral version of the New … variables: 1) a share of agents forecasts that inflation and output will rapidly revert to steady state; 2) another share forms … inflationary shocks. In response to rising inflation after COVID, agents begin shifting from the mean reversion model to the trend …