The divergence between core and headline inflation: Implications for consumers' inflation expectations

Arora, VipinGomis-Porqueras, PedroShi, ShuPing2015-12-130164-0704http://hdl.handle.net/1885/77861We show that US consumer inflation expectations are formed using a variant of adaptive expectations proposed by Mankiw et al. (2004). In particular, expectations behave differently when food and energy prices rise sharply relative to other prices. Using tThe divergence between core and headline inflation: Implications for consumers' inflation expectations201310.1016/j.jmacro.2013.07.0062015-12-11