Flattening of the Phillips Curve: Estimations and consequences for economic policy
AbstractWe test the hypothesis that the long-term Phillips curve is downward sloping and has become flatter in the last 10 to 15 years. Controlling for the most important other factors influencing the inflation rate, we estimate cointegrations and test whether a "break" in the Phillips curve can be detected. We restrict our study to Germany, France, Italy, Spain, the UK and the USA. The results vary considerably between the countries, but all exhibit a downward sloping long-run Phillips curve and show the presumed "break". First we explain the results by changes in the wage or price setting circumstance. Then we critically discuss explanations based on the time-varying NAIRU and put against them explanations based on aggregate demand and hysteresis. In the conclusion, some consequences for economic policy are indicated.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Edward Elgar in its journal Intervention. European Journal of Economics and Economic Policies.
Volume (Year): 8 (2011)
Issue (Month): 1 ()
Contact details of provider:
Web page: http://www.elgaronline.com/ejeep
Phillips curve; NAIRU; unemployment; inflation; hysteresis; cointegration;
Find related papers by JEL classification:
- C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models &bull Diffusion Processes
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Helen Craven).
If references are entirely missing, you can add them using this form.