Did we predict low inflation in the US seven years ago?

Todd Clark and Saeed Zaman from the Federal Reserve Bank of Cleveland wrote a few  days ago:
"Many observers have been surprised by the decline in consumer price inflation that has occurred since early 2012. "

Seven years ago we first presented a model predicting the rate of  US inflation at a ten year horizon. The paper was published by the Society for the Study of Economic Inequality (ECINEQ) and ended by the following statement: "The current period of disinflation will probably transform into deflation starting 2010-2012."
Since the model is based of labor force projections, the accuracy of inflation prediction critically depends on the precision of labor force estimates. Another paper introduces a corrected labor force estimate and  states that the rate of inflation will be close to zero during the next five years.  
On December 7, 2013 this model will be presented at the Conference "Inflation Developments after the Great Recession - A Euro Area Business Cycle Network (EABCN)" 
 hosted by the Bundesbank and sponsored by the EABCN.


No comments:

Post a Comment