Quantifying Inflation Pressure and Monetary
Policy Response in the United States
Working Paper No. 04-W24R
Diana N. Weymark and Mototsugu Shintani
ABSTRACT [article]
We propose a methodology for constructing operational indices of inflation pressure, the monetary authority's effort to reduce this pressure, and the degree to which inflation pressure is alleviated. We begin with model independent definitions of
these concepts. When our definitions are applied to a specific model we obtain
model-specific functional forms for these indices. We apply our methodology to a micro-founded aggregate model with rational expectations. GMM estimates of the model are used to obtain quarterly time series of our indices for the United States from 1966 to 2001.
Keywords and Phrases: Inflation pressure, monetary policy, stabilization policy
JEL Classification Number: E50, E58