Estimates of the slope of the Phillips curve reported in the literature cover a range from roughly − 0.6 to zero depending on specification. Forward-looking specifications, favored by theory, produce the smallest slope estimates. This paper addresses this puzzle by studying the bivariate...

We identify two major changes in the dynamics of the federal funds rate in the 1990s. We model the desired rate in a two-regime setting, one when the Fed makes no change and the other when the Fed is moving the desired rate to a new level. We find that the 1990s saw a longer duration in the...