Monday, January 25, 2016

The Supposed Long-Term Decline in Inflation Expectations is a Myth

So say Atlanta Fed economists, Nikolay Gospodinov,  Paula Tkac, and Bin Wei:
To summarize, our analysis suggests that (1) long-run inflation expectations remain stable and anchored, (2) the seemingly large correlation of market-implied inflation compensation with oil prices arises mainly from the dynamics of the TIPS liquidity premium, and (3) long-run market- and survey-based inflation expectations are remarkably close in terms of level and dynamics over time. 

1 comment:

  1. Yes, the FED is a great predictor on things. So now instead of badmouthing them like you did your pamphlet, you hold them and their soothsayers in high regard.