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Employment adjustments noise and the expecfed rate of inflation in a simple inflation-unemployment model
Author(s)
Date Issued
1995
ISSN
0736-2994
1532-9356
Citation
Stochastic Analysis and Applications, 1995, vol. 13(1), pp. 125-135.
Type
Peer Reviewed Journal Article
Abstract
A simple inflation-unemployment model with inflation expectations is used to examine the effects of employment adjustments noise on the expected inflation rate. The mean expected inflation rate is shown to be positively related to the variance of the noise and negatively related to the speed of employment adjustments. The mean expected inflation rate is also shown to be greater than the difference between the nominal money growth rate and the rate of productivity increase
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