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The Robustness Check of Phillips Curve - Evidence from U.S. Economy During the COVID-19 Pandemic

In: Economic Management and Big Data Application Proceedings of the 3rd International Conference

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  • Pinhsuan Chiu

Abstract

In this paper, we use the Vector Autoregression (VAR) approach to examine the robustness of the Phillips Curve in the United States economy from January 2020 to June 2022. The data is characterized by VAR(4) with a cointegrating rank of 2, using the unemployment rate and sticky inflation. The Impulse Response Function (IRF) is used to examine the relationship between the unemployment rate and inflation. The Granger-causal Test results suggest that historical unemployment data is useful for improving inflation projections. With a longer prediction horizon, unemployment shocks have a greater impact on the forecast error variance of inflation. Based on the impulse response function, the Phillips Curve is not alive in the US economy during the COVID-19 pandemic, but it can still be a significant factor legitimate for the government to set economic policy.

Suggested Citation

  • Pinhsuan Chiu, 2024. "The Robustness Check of Phillips Curve - Evidence from U.S. Economy During the COVID-19 Pandemic," World Scientific Book Chapters, in: Sikandar Ali Qalati (ed.), Economic Management and Big Data Application Proceedings of the 3rd International Conference, chapter 66, pages 747-757, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789811270277_0066
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    More about this item

    Keywords

    Big Data; Information Management; Economic; Data Applications; Blockchain; E-commerce;
    All these keywords.

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • C8 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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