Top Research Papers on Inflation

We review recent trends in inflationary dynamics in the context of viable modified gravity theories. After providing a general overview of the inflationary paradigm emphasizing on what problems hot Big Bang theory inflation solves, and a somewhat introductory presentation of single-field inflationary theories with minimal and non-minimal couplings, we review how inflation can be realized in terms of several string-motivated models of inflation, which involve Gauss–Bonnet couplings of the scalar field, higher-order derivatives of the scalar field, and some subclasses of viable Horndeski theorie...

The past half-century has seen major shifts in inflation expectations, how inflation comoves with the business cycle, and how stocks comove with Treasury bonds. Against this backdrop, we review the economic channels and empirical evidence on how inflation is priced in financial markets. Not all inflation episodes are created equal. Using a New Keynesian model, we show how “good” inflation can be linked to demand shocks and “bad” inflation to cost-push shocks driving the economy. We then discuss asset pricing implications of “good” and “bad” inflation. We conclude by providing an outlook for in...

We study the effects of professionals’ survey-based inflation expectations on inflation for a large number of 36 economies, using dynamic cross-country panel estimation of New-Keynesian Phillips curves. We find that inflation expectations have a significantly positive effect on inflation. We also find that the effect of inflation expectations on inflation is significantly larger when inflation is higher. This suggests that second-round effects via the effects of higher inflation expectations on inflation are more relevant in a high-inflation environment.

Primordial black holes (PBH) may form from large cosmological perturbations, produced during inflation when the inflaton's velocity is sufficiently slowed down. This usually requires very flat regions in the inflationary potential. In this paper we investigate another possibility, namely that the inflaton climbs up its potential. When it turns back, its velocity crosses zero, which triggers a short phase of “uphill inflation” during which cosmological perturbations grow at a very fast rate. This naturally occurs in double-well potentials if the width of the well is close to the Planck scale. W...

Inflation in 2021 reached the highest level seen since the early 1980s. High inflation has raised questions regarding the speed with which inflation may return to the 2-percent range consistent with the Federal Reserve's inflation objective.

At the outbreak of the recent inflation surge, the public's attention to inflation was low but increased quickly once inflation started to rise. In this paper, I quantify when and by how much the public's attention to inflation changes, and derive the macroeconomic implications of these attention changes. I estimate an attention threshold at an inflation rate of about $4%$, and that attention doubles when inflation exceeds this threshold. Adverse supply shocks become more inflationary in times of high attention, and the increase in people's attention to inflation in 2021 accounts for half of t...

We examine the predictive relationship between various measures of inflation expectations and future inflation. We find that the expectations of professional economists and of businesses have tended to provide more accurate predictions of future inflation than the expectations of households and of financial market participants. However, the forecasts coming from a relatively simple and popular benchmark inflation forecasting model have historically been roughly as accurate as the expectations of businesses and professional economists.

South Africa had formally introduced a policy of inflation targeting (IT) in February 2000. By December 2001, the governor of the South African Reserve Bank, after reading the latest statistics, was concerned with the disappointing economic data. Economic activity had slowed drastically, to the point that the country appeared to be heading for a recession. The gloomy statistics forced the governor to consider whether the country had pursued the right policy. Persistently high unemployment, one legacy of the apartheid era, meant that South Africa did not have the luxury of waiting for new polic...

The capability of Cosmic Inflation to explain the latest Cosmic Microwave Background and Baryonic Acoustic Oscillation data is assessed by performing Bayesian model comparison within the landscape of nearly three-hundred models of single-field slow-roll inflation. We present the first Bayesian data analysis based on the third-order slow-roll primordial power spectra. In particular, the fourth Hubble-flow function ε4 remains unbounded while the third function verifies, at two-sigma, ε3 ∈[-0.4,0.5], which is perfectly compatible with the slow-roll predictions for the running of the sp...

We study the long-term effects of inflation surges on inflation expectations. German households living in areas with higher local inflation during the hyperinflation of the 1920s expect higher inflation today. Our evidence points towards a transmission of inflation experiences from parents to children and through local institutions. Differential historical inflation also modulates the updating of expectations to current inflation, the response to unconventional fiscal policies, and financial decisions. We obtain similar results in a test with Polish households residing in formerly German areas. Overall, o...

We review conceptual aspects of inflationary scenarios able to produce primordial black holes by amplifying the size of curvature fluctuations to the level required to trigger black hole formation. We identify general mechanisms to do so, both for single- and multiple-field inflation. In single-field inflation, the spectrum of curvature fluctuations is enhanced by pronounced gradients of background quantities controlling the cosmological dynamics, which can induce brief phases of non-slow-roll inflationary evolution. In multiple-field inflation, the amplification occurs through appropriate cou...

We use a representative online survey to investigate the inflation expectations of German consumers and the credibility of the ECB’s inflation target during the recent high inflation period. We find that credibility has trended downwards since summer 2021, reaching an all-time low in April 2022. The high correlation between inflation expectations and the actual rate of inflation strongly indicate that inflation expectations have been de-anchored from the inflation target. With increasing inflation, German consumers are more convinced that - in contrast to the ECB’s inflation target - inflation...

Improving the mechanisms for forecasting inflation is an important part of economic science. National central banks, which monitor and manage the dynamics of the price level in the economy, use and develop these mechanisms in practice. Scientists and bank analysts have developed an impressive variety of ways to obtain estimates of inflation expectations of professional economists and ordinary citizens, as well as models for predicting future inflation values. In the last ten years, big data obtained from the Internet has been increasingly used for nowcasting inflation expectations and forecast...

We propose a new measure of underlying inflation that informs, in real time, about asymmetric risks on the outlook of inflationary pressures. The asymmetries are generated through nonlinearities induced by economic activity. The new indicator is based on a multivariate regime-switching framework jointly estimated on disaggregated sub-components of the euro area HICP and has several additional advantages. First, it is able to swiftly infer abrupt changes in underlying inflation. Second, it helps to timely track turning points in underlying inflation. Third, the proposed indicator also has a s...

This is a review of the current status of studies of cosmological inflation, extracted from Chapter 23 of the 2023 edition of the `Review of Particle Physics': R.L. Workman et al. (Particle Data Group), Prog. Theor. Exp. Phys., 2022, 083C01 (2022) and 2023 update.

The COVID-19 pandemic eventually gave rise to large increases in profits, profit shares and inflation rates. A major controversy has developed among economists and in the media about whether this was largely caused by profit inflation, that is, by increases in the percentage mark-ups set by firms. The paper attempts to clear some confusions regarding the issue of profit inflation, dealing with its definitions and the complexities of its measures. In particular, it shows that increases in economic activity and increases in the relative cost of domestic or imported inputs will lead to an increas...

Warm inflation has normalized two ideas in cosmology, that in the early universe the initial primordial density perturbations generally could be of classical rather than quantum origin and that during inflation, particle production from interactions amongst quantum field, and its backreaction effects, can occur concurrent with inflationary expansion. When we first introduced these ideas, both were met with resistance, but today they are widely accepted as possibilities with many models and applications based on them, which is an indication of the widespread influence of warm inflation. Open qu...

This chapter summarizes the mixed-frequency methods commonly used for nowcasting inflation. It discusses the importance of key high-frequency data in producing timely and accurate inflation nowcasts. In the US, consensus surveys of professional forecasters have historically provided an accurate benchmark for inflation nowcasts because they incorporate professional judgment to capture idiosyncratic factors driving inflation. Using real-time data, we show that a relatively parsimonious mixed-frequency model produces superior point and density nowcasting accuracy for headline inflation and compet...

We document novel survey-based facts on preferred long-run inflation rates among U.S. consumers. Consumers on average prefer a 0.20% annual inflation rate, considerably below the Federal Reserve’s 2% target. Inflation preferences not only correlate with demographic and socioeconomic characteristics, but also with economic reasoning. A randomized control trial reveals that two narratives based on economic models—describing how inflation lowers the real value of wages as well as money holdings—affect inflation preferences. While our results can inform the design of central bank communication on ...

Those of professional forecasters do. For a wide range of time series models for the euro area and its member states we find a higher average forecast accuracy of models that incorporate information on inflation expectations from the ECB’s SPF and Consensus Economics compared to their counterparts that do not. The gains in forecast accuracy from incorporating inflation expectations are typically not large but significant in some periods. Both short- and long-term expectations provide useful information. By contrast, incorporating expectations derived from financial market prices or those of fi...

We analyse the geometry of a spherically symmetric black hole with an inner and outer apparent horizon which is perturbed by spherical null shells of matter. On a classical level we observe that the mass inflation instability is triggered, resulting in a growth of curvature and an inward displacement of the inner horizon. We study in detail the inner structure of the mass-inflated region and compare it with previous results obtained for the case in which the perturbing matter content has a continuous distribution. We then perform an approximate calculation of the renormalised stress-energy tenso...

ABSTRACT:Inflation has an anchor in people's expectations of what its longrun value will be. If expectations persistently change, then the anchor is adrift; if they differ from the central bank's target, the anchor is lost. This paper uses data on expectations from market prices, from professional surveys, and from the cross-sectional distribution of household surveys to measure shifts in this anchor. The paper's main application is to the Great Inflation in the United States. The data suggest that the anchor started drifting as early as 1967 and that this could have been spotted well before p...

We study the effects of forward looking communication in an environment of rising inflation rates on German consumers’ inflation expectations using a randomized control trial. We show that information about rising inflation increases short-and long-term inflation expectations. This initial increase in expectations can be mitigated using forward looking information about infla-tion. Among these information treatments, professional forecasters’ projections seems to reduce inflation expectations by more than policymaker’s characterization of inflation as a temporary phenomenon.

We provide evidence on the stories that people tell to explain a historically notable rise in inflation using samples of experts, U.S. households, and managers. We document substantial heterogeneity in narratives about the drivers of higher inflation rates. Experts put more emphasis on demand-side factors, such as fiscal and monetary policy, and on supply chain disruptions. Other supply-side factors, such as labor shortages or increased energy costs, are equally prominent across samples. Households and managers are more likely to tell generic stories related to the pandemic or mismanagement by...

We study the impact of (generalized) cuscuton models on standard single scalar field inflation. Generalized cuscuton models are characterized by spatial covariant gravity where a scalar degree of freedom is made non dynamical, and there are just two tensor degrees of freedom. The presence of the non-dynamical scalar field does not spoil inflation but instead the modifications are, in general, slow-roll suppressed leading to almost scale-invariant power spectra. However, the extra free parameters, which can be tuned relatively independently, lead to a larger parameter range for observable quant...

The authors apply a Hidden Markov Model to identify regimes of shifting inflation and then employ an attribution technique based on the Mahalanobis distance to identify the economic variables that determine the trajectory of inflation. Their analysis enables policymakers to focus on the most effective tools to manage inflation, and it offers guidance to investors whose strategies might benefit from knowledge of the prevailing determinants of inflation. Their analysis reveals that as of February 2022, the most important determinant of the recent spike in inflation was spending by the federal go...

We study euro-area risk-adjusted expected inflation and the inflation risk premium at different maturities, leveraging inflation swaps, inflation options and survey-based forecasts. We introduce a model that features time-varying long-term average inflation and time-varying inflation volatility and we anchor market-based risk-adjusted measures of expected inflation to survey-based inflation forecasts. The results show that medium-term risk-adjusted expected inflation was close to the ECB's aim from 2010 to mid-2014, has since fallen to a low in March 2020 and has risen significantly since the ...

Predictions of oil prices reaching $100 per barrel during the winter of 2021/22 have raised fears of persistently high inflation and rising inflation expectations for years to come. We show that these concerns have been overstated. A $100 oil scenario of the type discussed by many observers, would only briefly raise monthly headline inflation, before fading rather quickly. However, the short-run effects on headline inflation would be sizable. For example, on a year-over-year basis, headline PCE inflation would increase by 1.8 percentage points at the end of 2021 under this scenario, but only b...

Abstract Research background: Price stability plays a crucial role in ensuring stabilities in the financial markets as well as the real sector. Despite this, questions are still raised, querying if it is either inflation, inflation uncertainty or a combination of both, which affects economic growth? The results obtained, both theoretically and empirically, differ. This paper seeks to revisit and provide both the theoretical and empirical review of literature on the inflation, inflation uncertainty and economic growth nexus. Purpose: The focus of the paper is centred on the review of theoretica...

We develop a new class of general-equilibrium models with partially unfunded debt to propose a fiscal theory of persistent inflation. In response to business cycle shocks, the monetary authority controls inflation and the fiscal authority stabilizes debt. However, the central bank accommodates unfunded fiscal shocks, causing persistent movements in inflation, output, and real interest rates. In an estimated quantitative model, fiscal inflation accounts for the bulk of inflation dynamics. In the aftermath of the pandemic, unfunded fiscal shocks sustain the recovery, but also cause a persisten...

Our analysis shows a strong relationship between households ’ perceptions about inflation over the past 12 months and households ’ short - and long - term expectations about future inflation. We find two key moderating factors for the pass - through: differential information sources used to form inflation perceptions and differences in individual uncertainty about future inflation. Our results suggest that central bankers can influence inflation expectations by managing inflation perceptions. We investigate the relationship between perceptions and expectations. We use micro from the Bundesbank...

It was pointed out previously [1] that a sufficiently negative running of the spectral index of curvature perturbations from (ordinary i.e. cold) inflation is able to prevent eternal inflation from ever occurring. Here, we reevaluate those original results, but in the context of warm inflation, in which a substantial radiation component (produced by the inflaton) exists throughout the inflationary period. We demonstrate that the same general requirements found in the context of ordinary (cold) inflation also hold true in warm inflation; indeed an even tinier amount of negative running is suffi...

Warm inflation, its different particle physics model implementations, and the implications of dissipative particle production for its cosmology are reviewed. First, we briefly present the background dynamics of warm inflation and contrast it with the cold inflation picture. An exposition of the space of parameters for different well-motivated potentials, which are ruled out, or severely constrained in the cold inflation scenario, but not necessarily in warm inflation, is provided. Next, the quantum field theory aspects in realizing explicit microscopic models for warm inflation are given. This...

What is the effect of higher expectations of future inflation on current inflation? I compute this passthrough for a series of canonical firm-pricing models, but allowing for arbitrary (non-rational) expectations. In the Calvo model, the expectational-passthrough can be made arbitrarily close to zero for sufficiently high stickiness, but in practice, for reasonable parameters, passthrough is close to its upper bound of 1. In the Taylor model, in contrast, the upper bound for passthrough is ½ instead of 1. For a general time-dependent model I show that: (i) passthrough is given by a measurable suffi...

We develop a multisector, open economy, New Keynesian framework to evaluate how potentially binding capacity constraints, and shocks to them, shape inflation. We show that binding constraints for domestic and foreign producers shift domestic and import price Phillips Curves up, similar to reduced-form markup shocks. Further, data on prices and quantities together identify whether constraints bind due to increased demand or reductions in capacity. Applying the model to interpret recent US data, we find that binding constraints explain half of the increase in inflation during 2021-2022. In parti...

One of the dangers of high inflation is that it can cause individuals to pay close attention to it. This internalization of inflation can lead to an accelerationist regime, making inflation harder to control. We empirically assess the relationship between attention and inflation for 38 countries. Our measures of attention are constructed from internet search behavior or the popularity of inflation mentions on Twitter. We find evidence that attention thresholds exist for most of the countries and that they typically occur between 2-4% inflation. We also document interesting variability across...

From its inflection point in February 2021 to November 2021, the CPI rose 6 percent (278.88/263.161), an 8 percent annualized rate. Why? Starting in March 2020, in response to the disruptions of Covid-19, the U.S. government created about $3 trillion of new bank reserves, equivalent to cash, and sent checks to people and businesses. (Mechanically, the Treasury issued $3 trillion of new debt, which the Fed quickly bought in return for $3 trillion of new reserves. The Treasury sent out checks, transferring the reserves to people’s banks. See Table 1.) The Treasury then borrowed another $2 trilli...

Over the last couple years, the world has experienced the highest levels of inflation in more than four decades. This paper provides a framework for analyzing the causes and the appropriate responses. We show that it is not caused by an excess of aggregate demand, and in particular, not caused by any excess consumption arising from excessive pandemic spending, but by supply-side shocks, largely induced by the pandemic (e.g., chips), and also by the war in Ukraine, combined with sectoral demand shifts. We analyze the role played by market power and the lack of resilience. Increases in interes...

This study created a new type of inflatable metamorphic origami that has the advantage of being a highly simplified deployable system capable of realizing multiple sequential motion patterns with a monolithic actuation. The main body of the proposed metamorphic origami unit was designed as a soft inflatable metamorphic origami chamber with multiple sets of contiguous/collinear creases. In response to pneumatic pressure, the metamorphic motions are characterized by an initial unfolding around the first set of contiguous/collinear creases followed by another unfolding around the second set of co...

The study concentrates on the discussion in Hungary about the causes of contemporary inflation: what are the main causes of it and how to rank them. It tries to establish whether the simple methods of monetary policy are appropriate to stop inflation. The method of the study is an overview of recent professional articles and the analysis of the data of Central Statistical Office publications. It concludes that the Hungarian inflation has several internal and external causes: uncovered spending power especially in time of the COVID epidemic, the growing energy prices because of the Ukrainian wa...

This paper aims to explore the distribution of inflation rates at the household level and estimate their determinants using the Household Budget Surveys. It derives the household level inflation rates using the democratic price index and analyzes inflation inequality and its persistency. The main contributions of the paper are as follows: (i) to determine inflation inequality by examining the distribution of household-specific inflation rates calculated by the democratic price index, (ii) to examine new dimensions of inflation inequality in Turkey by income groups and household characteristics...

This paper investigates the drivers of Turkish in‡ation by using a structural vector autoregression model, where monthly data on global oil prices, unemployment rates, in‡ation rates, policy rates and exchange rates are used. The empirical results show that Turkish in‡ation increases following a negative policy rate shock, a positive exchange rate shock, or a positive global oil price shock. The volatility of Turkish in‡ation is mostly explained by global oil prices and exchange rate movements in the long run, while the contribution of exchange rate shocks to Turkish in‡ation has continuously ...

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This paper reviews the post-Keynesian theory of inflation against the background of the simultaneous rise in inflation and profit shares in the course of the COVID-19 recovery and the Russian war in Ukraine. It distinguishes between the Keynes, Kaldor, Robinson, and Marglin tradition, and the Kalecki, Rowthorn, and Dutt tradition. Two prototype models in the latter tradition — the Dutt, Blecker–Setterfield and Lavoie variant, and the Rowthorn and Hein–Stockhammer variant — are discussed. The paper applies the latter to elucidate recent inflation trends propelled by increasing imported energy p...

Economists and economic policymakers believe that households' and firms' expectations of future inflation are a key determinant of actual inflation. A review of the relevant theoretical and empirical literature suggests that this belief rests on extremely shaky foundations, and a case is made that adhering to it uncritically could easily lead to serious policy errors.

Some of the most important quintessential inflation scenarios, such as the Peebles–Vilenkin model, are described in detail. These models are able to explain the early- and late-time accelerated expansions of our universe, and the phase transition from the end of inflation to the beginning of kination where the adiabatic evolution of the universe was broken in order to produce enough particles to reheat the universe with a viable temperature, thereby aligning with the Hot Big Bang universe. In addition, while considering the reheating to be due to the gravitational production of superheavy part...

PurposeThis paper examines the role price fluctuations associated with internationally traded commodities play in inflationary conditions and inflation uncertainty among economies in Sub-Saharan Africa.Design/methodology/approachUsing a panel 32 countries from the sub-region from 1996 to 2019, this study employed Two-Step System Generalized Method of Moments (GMM) estimation technique in its analysis.FindingsEmpirical evidence demonstrates that fluctuations in forex-adjusted price of crude oil, gold and cocoa have significant positive impact on inflation while forex-adjusted changes in price o...

. The inflationary paradigm is discussed. The definiteness of the most important prediction of inflation, namely, the prediction of initial inhomogeneities is analised critically. Some open problems of inflationary cosmology are analised.

We construct supergravity models allowing to sequester the phenomenology of inflation from the Planckian energy scale physics. The procedure consists of two steps: At Step I we study supergravity models, which might be associated with string theory or M‐theory, and have supersymmetric Minkowski vacua with flat directions. At Step II we uplift these flat directions to inflationary plateau potentials. We find certain conditions which ensure that the superheavy fields involved in the stabilization of the Minkowski vacua at Step I are completely decoupled from the inflationary phenomenology.

This paper examines the relationship between central bank transparency and inflation for six inflation targeting (IT) and ten non-inflation targeting (non-IT) Asian economies. The propensity score matching and panel regression model are employed in the study. The empirical analysis shows that IT enhances central bank transparency. Further, we find that central bank transparency in IT significantly lowers inflation, suggesting that countries promoting greater monetary policy transparency can have a better advantage of experiencing low inflation. Our findings have policy implications for central...