文档介绍：Implications of Structural
Changes in the . Economy
for Pricing Behavior and
Inflation Dynamics
Jonathan L. Willis
ome key features of the behavior of inflation in the United States
appear to have changed in the past 20 years, with potentially
S important implications for forecasters and policymakers. A
number of recent studies have provided strong evidence of a decline in
the quarter-to-quarter or year-to-year variability of inflation. There is
also evidence, albeit less conclusive, of a reduction in inflation persist-
ence, which is a measure of how long it takes inflation to return to
baseline after an unexpected change. Such shifts in the behavior or
dynamics of inflation would necessitate changes in the economic rela-
tionships used by policymakers and economists to assess current
conditions, forecast key economic indicators, and determine the impli-
cations of policy changes for future economic activity.
Because inflation is ultimately a ary phenomenon, the shift in
dynamics might be due to a systematic change in the conduct of mone-
tary policy since the late 1970s or early 1980s. Examinations of
ary policy, however, have yet to provide convincing evidence of
such a shift. While some evidence suggests that the behavior of policy
changed dramatically in the late 1970s or early 1980s, several empirical
studies find that it has been
Jonathan L. Willis is an economist at the Federal Reserve Bank of Kansas City.
Devrim Karaaslanli, a former research associate, and Scott Benolkin, a research
associate at the bank, helped prepare the article. This article is on the bank’s website at
.
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6 FEDERAL RESERVE BANK OF KANSAS CITY
The shift in . inflation dynamics might also reflect structural
changes in the economy. Structural changes in the economy can affect
the price-setting behavior of individual firms, which, when aggregated
into the overall price index, could lead to changes in inflation dynamics.
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