Orphanides, Athanasios; Williams, John C. - 2007
natural rates. In particular, the inflation rate is in part determined by the
unemployment gap, the deviation of the … unconditional variances of the inflation rate, the unemployment gap, and the
change in the nominal federal funds rate:
L = Var(π − π … variances of the quasi-difference of the inflation rate
and the level and quasi-difference of the unemployment gap. For the …