Resolving the missing deflation puzzle

• 成果类型: Article
• 署名作者: Harding, Martin; Linde, Jesper; Trabandt, Mathias
• 署名单位: Bank of Canada; Centre for Economic Policy Research - UK; Goethe University Frankfurt; Leibniz Association; Leibniz Institut fur Wirtschaftsforschung Halle (IWH)
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2021.09.003
• 发表日期: 2022
• 页码: 15-34
• 关键词: Great recession; inflation dynamics; monetary policy; zero lower bound; Nonlinear model solution

摘要

A resolution of the missing deflation puzzle is proposed. Our resolution stresses the importance of nonlinearities in price- and wage-setting when the economy is exposed to large shocks. We show that a nonlinear macroeconomic model with real rigidities resolves the missing deflation puzzle, while a linearized version of the same underlying nonlinear model fails to do so. In addition, our nonlinear model reproduces the skewness of inflation and other macroeconomic variables observed in post-war U.S. data. All told, our results caution against the common practice of using linearized models to study inflation and output dynamics. (C) 2021 International Monetary Fund and The Author(s). Published by Elsevier B.V.