Supply, Factor Shares and Inflation Persistence: Re-examining Euro-area New-Keynesian Phillips Curves
AbstractUsing euro-area data, we re-examine the empirical success of New-Keynesian Phillips curves (NKPCs). We re-estimate with a suitably specified optimizing supply side (which attempts to treat non-stationarity in factor income shares and mark-ups) that allows us to derive estimates of technology parameters, marginal costs and 'price gaps'. Our resulting estimates of the euro-area NKPCs are robust, provide reasonable estimates for fixed-price durations and discount rates and embody plausible dynamic properties. Our method for identifying the underlying determinants of NKPCs has general applicability to a wide set of countries as well as of use for sectoral studies. Copyright 2004 Blackwell Publishing Ltd.
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Bibliographic InfoArticle provided by Department of Economics, University of Oxford in its journal Oxford Bulletin of Economics & Statistics.
Volume (Year): 66 (2004)
Issue (Month): s1 (09)
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