A Two-Pillar Phillips Curve for Switzerland
AbstractMonetary aggregates have historically played an important role in Swiss monetary policy, with the Swiss National Bank using money growth targets until 1999. Since 2000, when a new policy framework was introduced that focuses on an inflation forecast, money growth has been used as an indicator variable. Given the continued reliance on monetary aggregates, the question arises how useful money growth is for explaining future price developments. Using Swiss data spanning 1979 to 2005, this paper estimates Phillips curve models that incorporate a measure of "trend" money growth. Using M3, we find that money growth impacts on inflation. M2, however, matters only if the downward shift in nominal interest rates over the sample is taken into account.
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Bibliographic InfoArticle provided by Swiss Society of Economics and Statistics (SSES) in its journal Swiss Journal of Economics and Statistics.
Volume (Year): 143 (2007)
Issue (Month): IV (December)
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More information through EDIRC
inflation; money growth; Phillips curve; Switzerland;
Other versions of this item:
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
- E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
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