Testing the Monetary Policy Implications of the Accelerationist Phillips Curve
AbstractThe issue of the backward-looking versus the forward-looking Phillips curve is still an open question in the macroeconomics profession. We identify the real output effects of monetary policy shocks as a crucial implication of the traditional Phillips curve. The backward-looking Phillips curve predicts a strict intertemporal trade-off in the case of monetary shocks: a positive short run response of output is followed by a period where output is below the baseline. The resulting cumulative output effect is exactly zero. The empirical evidence on the cumulated output effects of money are in strikingly contrast to the backward-looking model.
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Bibliographic InfoArticle provided by Cyprus Economic Society and University of Cyprus in its journal Ekonomia.
Volume (Year): 8 (2005)
Issue (Month): 1 (Summer)
Find related papers by JEL classification:
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
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