Fill in the values in the table below for inflation and expected inflation using the 1960s. The

Question:

Fill in the values in the table below for inflation and expected inflation using the 1960s. The data will come from FRED as they did in the last question. You will have the most success using a spreadsheet.

image text in transcribed

image text in transcribed

image text in transcribed

a. Is zero a good choice for the value of \(\theta\) in the 1960s? Is \(\bar{\pi}=0\) a good choice for a value of \(\bar{\pi}\) ? How are you making these judgements?

b. Is 1 a good choice for the value of \(\theta\) in the 1960s? How are you making that judgement?

c. Is zero a good choice for the value of \(\theta\) or \(\bar{\pi}\) in the 1970s? How are you making that judgement?

d. Is 1 a good choice for the value of \(\theta\) in the 1970s? How are you making that judgement?

e. How does the model where the anchored rate of inflation is \(2 \%\) fit the data after 2012 ? How are you making that judgement?

f. Is 1 a good choice for the value of \(\theta\) in the 2010s? How are you making that judgement?
g. How do you compare the behaviour of inflation, its average level, and its persistence across these three time periods?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Macroeconomics A European Perspective

ISBN: 9781292360898

4th Edition

Authors: Olivier Blanchard, Alessia Amighini, Francesco Giavazzi

Question Posted: