tag:blogger.com,1999:blog-5713178645208582139.post6322289049623890576..comments2023-09-26T02:38:00.331-05:00Comments on Macro Musings Blog: Does Higher Expected Inflation Really Spur Spending?David Beckworthhttp://www.blogger.com/profile/04577612979801459194noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-5713178645208582139.post-86852637057714590002011-08-29T08:50:02.806-05:002011-08-29T08:50:02.806-05:00Lars,
I did this post in a rush and it is evident...Lars,<br /><br />I did this post in a rush and it is evident. I should have rotated the axis on the expected inflation graph so that x (expected inflation) causes y(consumer durables). I also should have done a vector autoregression and isolated true shocks to the forecasted series. Maybe I will do that in a note.David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-57732383801155786882011-08-27T00:34:42.784-05:002011-08-27T00:34:42.784-05:00David, I initial reservation about the graph is sa...David, I initial reservation about the graph is same as Nick's. We know there is fairly high autocorrelation in both nominal private consumption and inflation. However, since this is market data and you are using 10y rather than short-term inflation expectations I think the problems are somewhat smaller.<br /><br />How would the graphs look in differences? So acceleration/deceleration in Lars Christensenhttps://www.blogger.com/profile/08409946182659964026noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-13389777846671619992011-08-26T22:36:12.504-05:002011-08-26T22:36:12.504-05:00David,
Shouldn't expected inflation also caus...David,<br /><br />Shouldn't expected inflation also cause the supply side in all markets like loanable funds and goods markets to shift to the left, in expectations of higher prices, therefore nullifying any positive shift from the demand curve? Why should expected inflation only effect demand but not also supply of loans, goods, and labor?JoeMachttps://www.blogger.com/profile/12650518988624821388noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-73037013630455994722011-08-26T15:54:10.347-05:002011-08-26T15:54:10.347-05:00Kirk:
I went back took the and mid-month populati...Kirk:<br /><br />I went back took the and mid-month population(http://research.stlouisfed.org/fred2/graph/?g=1OM) and redid the graphs. The results were largely the same. For example, the R-squared was 46.14% for the 2-year horizon 52.42% for the 3-year.David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-14088290250621040722011-08-26T15:22:24.474-05:002011-08-26T15:22:24.474-05:00Is consumer spending on a per capita basis?
The c...Is consumer spending on a per capita basis?<br /><br />The case for a casual relationship would seem stronger if spending normalized by nominal GDP growth increased faster when inflation expectations were higher. Or consider percent increases in real consumption on a per capita basis vs. inflation expectations.<br /><br />Engineers like myself like to work the data hard.<br /><br />Best regardsKirk Hanawaltnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-75898104580373048702011-08-26T15:12:37.832-05:002011-08-26T15:12:37.832-05:00Nick, just to be clear these figures are looking a...Nick, just to be clear these figures are looking at expected inflation at time t and comparing it to actual nominal consumer spending at time t+1, t+2, etc.<br /><br />If changes in expected inflation at time t are causing subsequent changes in actual inflation at time t+1, then yes it is behind some of this relationship. <br /><br />But that is the point, right? By having the central bank David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-13413245441495838402011-08-26T14:53:55.272-05:002011-08-26T14:53:55.272-05:00David: any chance though, that you are just pickin...David: any chance though, that you are just picking up the correlation between actual and expected inflation? In other words, we might expect to see some sort of positive correlation like this, even if real consumption was constant, and even if actual inflation was exogenous.Nick Rowehttps://www.blogger.com/profile/04982579343160429422noreply@blogger.com