What the study found
The study finds that the effects of U.S. monetary policy on inflation have strengthened over time. It also reports that the Phillips curve, a relationship between inflation and economic slack, flattened over much of the pre-pandemic period, while inflation expectations became less responsive at longer horizons.
Why the authors say this matters
The authors conclude that the findings point to more firmly anchored inflation expectations and improved policy credibility. They also suggest that Phillips curve dynamics are regime dependent, meaning the relationship can change across periods.
What the researchers tested
The researchers used a machine learning framework to assess how U.S. monetary policy transmission has evolved since inflation targeting began. They estimated time-varying parameter local projections with ridge regression, which allowed them to track gradual shifts in macroeconomic relationships and account for heteroskedasticity, or changing variability across parameters.
What worked and what didn't
The analysis suggests that time-varying monetary policy effects on inflation strengthened. It also indicates a diminished pass-through from short-horizon to long-horizon inflation expectations, and a flatter Phillips curve over much of the pre-pandemic period. The study further documents a temporary steepening of the Phillips curve during the post-pandemic inflation surge.
What to keep in mind
The abstract does not describe specific data limitations or robustness checks. The findings are presented for the U.S. and for the period since inflation targeting, so the summary does not state that they apply more broadly.
Key points
- U.S. monetary policy appears to have had stronger effects on inflation over time.
- The Phillips curve flattened over much of the pre-pandemic period.
- Short-horizon inflation expectations passed through less to long-horizon expectations.
- The authors link the weaker pass-through to more firmly anchored expectations and improved policy credibility.
- A temporary steepening of the Phillips curve is reported during the post-pandemic inflation surge.
Disclosure
- Research title:
- U.S. monetary policy effects on inflation appear to have strengthened
- Authors:
- Dooyeon Cho, Jaehun Jung
- Institutions:
- Irvine University, Sungkyunkwan University, University of California, Irvine
- Publication date:
- 2026-04-02
- OpenAlex record:
- View
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