We develop a theory of low-frequency movements in in ation expectations, and use it to interpret joint dynamics of in ation and in ation expectations for the United States and other countries over the post-war period. In our theory long-run in ation expectations are endogenous. They are driven...

Changing time series properties of US inflation and economic activity, measured as marginal costs, are modeled within a set of extended Phillips Curve (PC) models. It is shown that mechanical removal or modeling of simple low frequency movements in the data may yield poor predictive results...

In many forward-looking macroeconomic models, such as the New Keynesian model, firms' expectations about the future play a key role in determining outcomes today. We examine this hypothesis using a novel panel dataset on firms actual and expected price changes collected by the Confederation of...