This paper uses monthly survey data for the G7 countries for the time period 1989 - 2007 to explore the link between expectations on nominal wages, prices and unemployment rate as suggested by the traditional and Samuelson-and-Solow-type Phillips curve. Three ma- jor ¯ndings stand out: First, we ¯nd that survey participants trust in the original as well as the Samuelson-and-Solow-type Phillips curve relationship. Second, we ¯nd evidence in favor of nonlinearities in the expected Samuelson-and-Solow-type Phillips curve. Third, when we take into account a kink in the expected Phillips curve indicating that the slope of the Phillips curve di®ers during the business cycle, we ¯nd strong evidence of this feature in the data which con¯rms recent the- oretical discussions in the literature that the Phillips curve is °atter in case of an economic downturn.
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Find related papers by JEL classification: C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
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