Current Issues in Economics and Finance

Understanding the Recent Behavior of U.S. Inflation

July 2000Volume 6, Number 8
JEL classification: E31, E32, E37

Authors: Robert W. Rich and Donald Rissmiller

One of the most surprising features of the long current expansion has been the decline in price inflation through the late 1990s. Some observers interpret the decline as evidence of a permanent change in the relationship between inflation and economic growth. But an analysis based on a standard forecasting model suggests that conventional economic factors—most notably, a decrease in import prices—can account for the low inflation rates in recent years.

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