Ron Mau

2 months ago | dallasfed.org | Tyler Atkinson |Ron Mau

January inflation data were stronger in 2023 and 2024 than forecasters expected, even after more encouraging results had been reported for the ends of 2022 and 2023. Rather than reflecting seasonal adjustment difficulties, this pattern may be caused by a large share of firms changing prices at the start of a new year. If this is the case, first-quarter inflation data may exhibit greater persistence and sensitivity to swings in the business cycle.

Jul 16, 2024 | dallasfed.org | Tyler Atkinson |Ron Mau

The Phillips curve describes the relationship between slack and inflation. In the short run, running the economy hot, or with output growth above potential, comes with the cost of additional inflation. But policymakers cannot exploit this relationship forever because the public will come to expect a higher level of inflation for any given level of output. That is, the statistical relationship between slack and inflation shifts due to changes in policy behavior—an example of the Lucas critique.

Feb 20, 2024 | dallasfed.org | Tyler Atkinson |Ron Mau

Most forecasters and policymakers were surprised by the degree and persistence of high inflation in 2021 and 2022. These large misses in predicting inflation were preceded by an unprecedented level of money growth, bringing renewed attention to quantity-theoretic linkages between inflation and money growth (Chart 1). Downloadable chart |Chart dataSome analysts view high inflation in 2021 and 2022 as unsurprising and a predictable consequence of rapid money growth.