63,378 research outputs found
The South African Phillips Curve: How Applicable is the Gordon Model?
No full textIs there a Phillips curve relationship present in South Africa and if so, what form does it take? Traditionally the way to estimate the Phillips curve is merely to regress the change in the price level on a measure of the output gap (or the deviation of actual unemployment from the NAIRU). However, Gordon (1990:481-5) has argued that estimating the Phillips curve in this manner biases the estimated results. Instead, Gordon (1997; 1989) puts forward his so-called triangular model that controls for inertia effects, output level effects and rates-of-change (in output) effects. He applies the model to several European countries, the US and Japan and finds meaningful results. The question this paper poses is whether or not the triangular model also applies to South Africa. In estimating the Phillips curve for South Africa the paper also experiments with four versions of the output gap, based on four different methods to estimate long run output, including the standard Hodrick-Prescott (HP) filter and the production function approach. There are several variants of the Phillips curve. The first, as estimated by Phillips (1958) himself, measures the relationship between wage inflation and unemployment. However, other versions consider the relationship between price inflation and unemployment or price inflation and output. This paper focuses on the latter, given the absence of quarterly unemployment data in South Africa, as well as the lack of a reliable and sufficiently long unemployment time series. The paper first presents an overview of literature on the Phillips curve and its estimation for South Africa and other countries. This is followed by the second section that considers the model to be estimated, the data as well as the discussion of the alternative measures of the output gap. The third section presents the estimated results followed by section four that contains the conclusion and a discussion of the policy implications.
Wage and Price Phillips Curves
No full textIn this paper we introduce a small Keynesian model of economic growth which is centered around two advanced types of Phillips curves, one for money wages and one for prices, both being augmented by perfect myopic foresight and supplemented by a measure of the medium-term inflationary climate updated in an adaptive fashion. The model contains two potentially destabilizing feedback chains, the so-called Mundell and Rose-effects. We estimate parsimonious and congruent Phillips curves for money wages and prices in the US over the past five decades. Using the parameters of the empirical Phillips curves, we show that the growth path of the private sector of the model economy is likely to be surrounded by centrifugal forces. Convergence to this growth path can be generated in two ways: a Blanchard-Katz-type error-correction mechanism in the money-wage Phillips curve or a modified Taylor rule that is augmented by a term, which transmits increases in the wage share (real unit labor costs) to increases in the nominal rate of interest. Thus the model is characterized by local instability of the wage-price spiral, which however can be tamed by appropriate wage or monetary policies. Our empirical analysis finds the error-correction mechanism being ineffective in both Phillips curves suggesting that the stability of the post-war US macroeconomy originates from the stabilizing role of monetary policy.Phillips curves, Mundell effect, Rose effect, monetary policy, Taylor rule, inflation, unemployment, instability
Marriage record of Beatty, Charles P. and Phillips, Katie F.
No full textMarriage license for Charles P. Beatty and Katie F. Phillips. W.M. Poage was the officiant
Evolving Phillips trade-off
No full textWe characterise the evolution of the U.S. unemployment-inflation trade-off since the late XIX century era via a Bayesian time-varying parameters structural VAR. The Great Inflation episode appears as historically unique along several dimensions. In particular, the shape of the ‘Phillips loop’–which is defined in terms of the impulse-response functions of inflation and unemployment’s deviations from equilibrium–was, during those years, clearly out of line with respect to the rest of the sample period for all structural innovations except money demand shocks. During the Great Depression, on the other hand, the Phillips trade-off did not exhibit any peculiar qualitative feature, so that, when seen through these lenses, the 1930s only stand out because of the sheer size of the macroeconomic fluctuation. The historical evolution of the Phillips trade-off exhibits virtually no connection with the evolution of the extent of trade openness of the U.S. economy. Although, by itself, this does not rule out a possible impact of globalisation on the slope of the trade-off in recent years, it clearly suggests that, historically, the evolution of the trade-off has been dominated by factors other than trade openness. JEL Classification: E30, E32Bayesian VARs, Globalisation, Great Depression, Great Inflation, identified VARs, Lucas Critique, Phillips trade-off, stochastic volatility, time-varying parameters
The Phillips Curve in Australia
No full textIn this paper we discuss the development of Phillips curves in Australia over the forty years since Phillips first estimated one using Australian data. We examine the central issues faced by researchers estimating Australian Phillips curves. These include the distinction between the short and long-run trade-offs between inflation and unemployment, and the changing level of the non-accelerating inflation rate of unemployment (NAIRU), particularly in the 1970s. We estimate Phillips curves for prices and unit labour costs in Australia over the past three decades. These Phillips curves allow the NAIRU to change through time, and include a role for import prices and ‘speed-limit’ effects. The paper concludes by presenting an extended discussion of the changing role of the Phillips curve in the intellectual framework used to analyse inflation within the Reserve Bank of Australia over the past three decades.Phillips curve; inflation; unemployment; monetary policy
Inflation Forecasts and the New Keynesian Phillips Curve
No full textThe ability of the New Keynesian Phillips curve to explain US inflation dynamics when official central bank forecasts (Greenbook forecasts) are used as a proxy for inflation expectations is examined. The New Keynesian Phillips curve is estimated on quarterly data spanning the period 1970Q1-1998Q2 against the alternative of the Hybrid Phillips curve, which allows for a backward-looking component in the price-setting behavior in the economy. The results are compared to those obtained using actual data on future inflation as conventionally employed in empirical work under the assumption of rational expectations. The empirical evidence provides, in contrast to most of the relevant literature, considerable support for the standard forward-looking New Keynesian Phillips curve when inflation expectations are measured using official inflation forecasts. In this case, lagged inflation terms become insignificant in the hybrid specification. The usefulness of real unit labor cost as the preferred proxy for real marginal cost in recent empirical work on the Phillips curve is confirmed by our results.Money demand; Inflation; Phillips curve; Real marginal cost; Real-time data; GMM estimation
Does Immigration Affect the Phillips Curve? Some Evidence for Spain
No full textThe Phillips curve has flattened in Spain over 1995-2006: unemployment has fallen by 15
percentage points, with roughly constant inflation. This change has been more pronounced than elsewhere. We argue that this stems from the immigration boom in Spain over this period. We show that the New Keynesian Phillips curve is shifted by immigration if natives' and immigrants' labor supply or bargaining power differ. Estimation of the curve for Spain
indicates that the fall in unemployment since 1995 would have led to an annual increase in inflation of 2.5 percentage points if it had not been largely offset by immigration
The Phillips curve under state-dependent pricing
No full textThis paper is related to a large recent literature studying the Phillips curve in sticky-price equilibrium models. It differs in allowing for the degree of price stickiness to be determined endogenously. A closed-form solution for short-term inflation is derived from the dynamic stochastic general equilibrium (DSGE) model with state-dependent pricing originallydev eloped byDotsey , King and Wolman. This generalised Phillips curve encompasses the New Keynesian Phillips curve (NKPC) based on Calvo-type price-setting as a special case. It describes current inflation as a function of lagged inflation, expected future inflation, and current and expected future real marginal costs. The paper demonstrates that inflation dynamics generated bythe model for a broad class of time and state-dependent price-setting behaviours are well approximated bythe popular hybrid NKPC (with one lag of inflation) in a low-inflation environment. This provides an explanation of whythe hybrid NKPC performs well in describing inflation dynamics across industrial countries. It implies, however, that the reduced-form coefficients of the hybrid NKPC maynot have a structural interpretation.state-dependent pricing, inflation dynamics, Phillips curve
Plan of the estate named Fitzroy Terrace situate at Camperdown as apportioned out for sale by Emmanuel Phillips [cartographic material] /
No full textSales plan of Fitzroy Terrace allotments at Camperdown with landholders and location of Annandale turnpike.; Signature "E. W. Mck."; Also available in an electronic version via the Internet at: http://nla.gov.au/nla.map-f570; Ferguson Collection Map F 570
Understanding the Flattening Phillips Curve
No full textPolicy-makers have recently noted an apparent flattening of the Phillips curve. The implications of such a change include that a positive output gap would be less inflationary, but the cost of reducing inflation, once established, would increase. This paper’s objective is to review the evidence and possible explanations for the flattening of the Phillips curve in the context of new-Keynesian economic theory. Using data for the United States and Australia, we find that the flattening is evident in the baseline ‘structural’ new-Keynesian Phillips curve. We consider a variety of reasons for this structural flattening, such as data problems, globalisation and alternative definitions of marginal cost, none of which is entirely satisfactory.Phillips curve; inflation
- …
