Abstract

This paper identifies a structural break in core U.S. inflation Phillips curves such that oil prices contributed substantially before 1981, but since that time pass-through has been negligible. This characterization is robust to a variety of re-specifications and fits the data better than asymmetric and nonlinear oil price alternatives. Evidence does not support the hypotheses that declining energy intensity or deregulation of energy-producing and -consuming industries played an important role. Monetary policy did not itself become less accommodative of oil shocks, but may have helped create a regime where inflation is less sensitive to price shocks more generally.

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Additional Information

ISSN
1538-4616
Print ISSN
0022-2879
Pages
pp. 540-561
Launched on MUSE
2002-05-01
Open Access
No
Archive Status
Archived 2007
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