Replication data for: Shocks and Government Beliefs: The Rise and Fall of American Inflation

Principal Investigator(s):  View help for Principal Investigator(s) Thomas Sargent; Noah Williams; Tao Zha

Version:  View help for Version V1

Name File Type Size Last Modified
LICENSE.txt text/plain 14.6 KB 12/07/2019 03:50:AM
congradmin.c text/x-c 21.4 KB 12/07/2019 03:50:AM
congradmin.h text/plain 1.9 KB 12/07/2019 03:50:AM
csminwel.c text/x-c 31.2 KB 12/07/2019 03:50:AM
csminwel.h text/x-c 1.9 KB 12/07/2019 03:50:AM
cstz.c text/x-c 84.7 KB 12/07/2019 03:50:AM
cstz.h text/plain 9.2 KB 12/07/2019 03:50:AM
datainp_swz.prn text/plain 47.1 KB 12/07/2019 03:50:AM
doub.m text/plain 1.3 KB 12/07/2019 03:50:AM
fn_filesetup.c text/x-c 26.6 KB 12/07/2019 03:50:AM

Project Citation: 

Sargent, Thomas, Williams, Noah, and Zha, Tao. Replication data for: Shocks and Government Beliefs: The Rise and Fall of American Inflation. Nashville, TN: American Economic Association [publisher], 2006. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-12-07. https://doi.org/10.3886/E116230V1

Project Description

Summary:  View help for Summary We use a Bayesian Markov Chain Monte Carlo algorithm to estimate the parameters of a “true” data-generating mechanism and those of a sequence of approximating models that a monetary authority uses to guide its decisions. Gaps between a true expectational Phillips curve and the monetary authority’s approximating nonexpectational Phillips curve models unleash inflation that a monetary authority that knows the true model would avoid. A sequence of dynamic programming problems implies that the monetary authority’s inflation target evolves as its estimated Phillips curve moves. Our estimates attribute the rise and fall of post- WWII inflation in the United States to an intricate interaction between the monetary authority’s beliefs and economic shocks. Shocks in the 1970s made the monetary authority perceive a tradeoff between inflation and unemployment which ignited big inflation. The monetary authority’s beliefs about the Phillips curve changed in ways that account for former Federal Reserve Chairman Paul Volcker’s conquest of U.S. inflation. (JEL E24, E31, E52, N12)

Scope of Project

JEL Classification:  View help for JEL Classification
      E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
      E31 Price Level; Inflation; Deflation
      E52 Monetary Policy
      N12 Economic History: Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations: U.S.; Canada: 1913-


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