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UK Philips Curves and Monetary Policy

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Author Info
A Haldane
D Quah

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Abstract

This paper documents some stylized facts on evolving UK Phillips curves, and shows how these differ from their US versions. We interpret UK Phillips curve dynamics in a positive theory of monetary policy – how policy-maker attitudes on the Phillips curve have evolved since the 1950s – rather than, more traditionally, as interaction between exogenous demand and supply disturbances. Combining this framework with reasoned conjectures on how policy-makers’ beliefs have changed helps explain some features of the evolving UK Phillips curve. We suggest that correlations suggesting an extreme favorable unemployment-inflation tradeoff might indicate not something to be exploited but instead only policy-makers’ correctly acknowledging that no tradeoff exists.

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Publisher Info
Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number 0444.

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Date of creation: Feb 2000
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Handle: RePEc:cep:cepdps:0444

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Keywords: Beliefs inflation natural rate stability

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Rogoff, Kenneth, 1985. "The Optimal Degree of Commitment to an Intermediate Monetary Target," The Quarterly Journal of Economics, MIT Press, vol. 100(4), pages 1169-89, November. [Downloadable!] (restricted)
  2. Robert E. Lucas, Jr. & Thomas J. Sargent, 1979. "After Keynesian macroeconomics," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr. [Downloadable!]
  3. Lucas, Robert E, Jr, 1973. "Some International Evidence on Output-Inflation Tradeoffs," American Economic Review, American Economic Association, vol. 63(3), pages 326-34, June.
  4. Svensson, Lars E. O., 1997. "Inflation forecast targeting: Implementing and monitoring inflation targets," European Economic Review, Elsevier, vol. 41(6), pages 1111-1146, June. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Edward Nelson & Kalin Nikolov, . "Monetary policy and stagflation in the UK," Bank of England working papers 155, Bank of England. [Downloadable!]
    Other versions:
  2. Alessandra Iacobucci, 2003. "Spectral Analysis for Economic Time Series," Documents de Travail de l'OFCE 2003-07, Observatoire Francais des Conjonctures Economiques (OFCE). [Downloadable!]
  3. Eric Parrado, 2004. "Singapore's Unique Monetary Policy: How Does it Work?," IMF Working Papers 04/10, International Monetary Fund. [Downloadable!]
  4. Alessandra Iacobucci & Alain Noullez, 2004. "A Frequency Selective Filter for Short-Length Time Series," Documents de Travail de l'OFCE 2004-05, Observatoire Francais des Conjonctures Economiques (OFCE). [Downloadable!]
    Other versions:
  5. Thierry Warin, 2006. "From Full Employment to the Natural Rate of Unemployment: A Survey," Middlebury College Working Paper Series 0601, Middlebury College, Department of Economics. [Downloadable!]
  6. Richard Mash, 2000. "The Time Inconsistency of Monetary Policy with Inflation Persistence," Economics Series Working Papers 015, University of Oxford, Department of Economics. [Downloadable!]
  7. Doyle, Matthew, 2006. "Empirical Phillips Curves in OECD Countries: Has There Been A Common Breakdown?," Staff General Research Papers 12684, Iowa State University, Department of Economics. [Downloadable!]
  8. Alfonso Mendoza V., 2003. "The Inflation-Output Volatility Tradeoff and Exchange Rate Shocks in Mexico and Turkey," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 3(1), pages 27-51. [Downloadable!]
  9. Luca Benati, . "Evolving post-World War II UK economic performance," Bank of England working papers 232, Bank of England. [Downloadable!]
    Other versions:
  10. Jerry Coakley & Ana-María Fuertes & Gylfi Zoega, 2001. "Evaluating the Persistence and Structuralist Theories of Unemployment from a Nonlinear Perspective," Studies in Nonlinear Dynamics & Econometrics, Berkeley Electronic Press, vol. 5(3), pages 1078-1078. [Downloadable!] (restricted)
  11. Luca Benati, . "Band-pass filtering, cointegration, and business cycle analysis," Bank of England working papers 142, Bank of England. [Downloadable!]
  12. JUNCAL CUñNADO & FERNANDO PÉREZ DE GRACIA, 2003. "Sacrifice Ratios: some lessons from EMU countries, 1960-2001," International Review of Applied Economics, Taylor and Francis Journals, vol. 17(3), pages 327-337, July. [Downloadable!] (restricted)
  13. Nelson, Edward, 2001. "What Does the UK's Monetary Policy and Inflation Experience Tell Us About the Transmission Mechanism?," CEPR Discussion Papers 3047, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  14. Rebecca L Driver & Jennifer V Greenslade & Richard G Pierse, . "The role of expectations in estimates of the NAIRU in the United States and the United Kingdom," Bank of England working papers 180, Bank of England. [Downloadable!]
  15. Anders Warne & Anders Vredin, 2006. "Unemployment and Inflation Regimes," Studies in Nonlinear Dynamics & Econometrics, Berkeley Electronic Press, vol. 10(2), pages 1280-1280. [Downloadable!] (restricted)
    Other versions:
  16. Juncal Cuñado Eizaguirre & Fernando Pérez de Gracía Hidalgo, . "Tasa de sacrificio en la UEM: Un análisis empírico," Studies on the Spanish Economy 70, FEDEA. [Downloadable!]
  17. David G. Mayes & Matti Virén, 2004. "Asymmetries in the Euro area economy," Macroeconomics 0404024, EconWPA. [Downloadable!]
    Other versions:
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