Does the Barro-Gordon model explain the behavior of US inflation? A reexamination of the empirical evidence

Publicado en

  • Journal of Monetary Economics


  • This paper tests the predictions of the Barro-Gordon model using US data on inflation and unemployment. To that end, it constructs a general game-theoretical model with asymmetric preferences that nests the Barro-Gordon model and a version of Cukierman’s model as special cases. Likelihood Ratio tests indicate that the restriction imposed by the Barro-Gordon model is rejected by the data but the one imposed by the version of Cukierman’s model is not. Reduced-form estimates are consistent with the view that the Federal Reserve weights more heavily positive than negative unemployment deviations from the expected natural rate.

fecha de publicación

  • 2003

Líneas de investigación

  • ARCH
  • Asymmetric Preferences
  • Game-Theoretical Models of Monetary Policy
  • Prudence

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