Browsing by Author "Saravia, Diego"

Now showing 1 - 1 of 1
  • Thumbnail Image
    Item
    Changing inflation dynamics, evolving monetary policy: an overview
    (Banco Central de Chile, 2020) Castex, Gonzalo; Galí, Jordi; Saravia, Diego
    Understanding the dynamics of inflation has become an important challenge for both policymakers and researchers over the past decade. Empirical models linking inflation and economic activity—versions of the so-called Phillips curve—have failed to account for the behavior of inflation in many advanced economies. In particular, inflation in the U.S. and other countries was higher during the 2008-2009 Great Recession than the conventional empirical Phillips curve would imply. As noted by some economists, this “missing deflation” phenomenon may have already started in the mid-2000s. Just as puzzling, during the subsequent recovery, inflation has remained subdued relative to the predictions generated by existing models, despite the aggressive expansionary monetary policies implemented in many advanced economies.