AEA Papers and Proceedings
ISSN 2574-0768 (Print) | ISSN 2574-0776 (Online)
What Do Long Data Tell Us about the Permanent Component of Inflation?
AEA Papers and Proceedings
vol. 114,
May 2024
(pp. 101–05)
Abstract
Is postwar data enough to estimate the permanent component of inflation? We find that it is not for episodes of sudden and large inflation spikes like the one observed after the COVID-19 pandemic because such episodes are rare in the prewar sample (the inflation of the 1980s took 15 years to develop). However, prewar data is rich in sudden inflation spikes, thus providing useful information. Estimates using data over the period 1900–2022 predict that the permanent component of inflation increased by only 1.3 percentage points from 2019–2022 but by 5.0 percentage points when estimated using 1955–2022 data.Citation
Schmitt-Grohé, Stephanie, and Martín Uribe. 2024. "What Do Long Data Tell Us about the Permanent Component of Inflation?" AEA Papers and Proceedings, 114: 101–05. DOI: 10.1257/pandp.20241054Additional Materials
JEL Classification
- C82 Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
- E31 Price Level; Inflation; Deflation
- N12 Economic History: Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations: U.S.; Canada: 1913-