consumer price index

Can We Rely on Inflation Expectations?

The Wall Street Journal has pointed out that in his recent press conference Federal Reserve Chair Ben Bernanke used the words “inflation expectations” (or some variation) 21 times. His argument is that we need not worry about inflation because we will see it coming, and then the Fed will do something about it.

Is There an Inflation-Unemployment Trade-off?

Much of what drives the policy choices of Ben Bernanke and the Federal Reserve is a belief in the ability to trade higher inflation for lower unemployment, known within the economics profession as the “Phillips curve.”   But does this trade-off actually exist? 

How Imports Raise Real Incomes

The Consumer Price Index (CPI-U) for “All Items” rose by about 23 percent over the course of the last decade.*  That implies that—on average—a person whose salary was $50,000 in 2000 saw his real income rise (fall) if his nominal income was more (less) than $61,500 in 2009.  By the same measure, an hourly worker earning $20 per hour in 2000 had to be earning more than $24.60 per hour in 2009 to have experienced an increase in his real wage.

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