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The anti-Phillips curve

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  • Kitov, Ivan

Abstract

There is no Phillips curve in the United States, i.e. unemployment does not drive inflation at any time horizon. There is a statistically robust anti-Phillips curve - inflation leads unemployment by 10 quarters. Apparently, the anti-Phillips curve would be the conventional one, if the time would flow in the opposite direction. Several tests for cointegration do not reject the hypothesis that there exist a long-term equilibrium relation between inflation and unemployment in the US. The cointegrating relation between inflation and unemployment is not the proof of causality, however, and both variables are driven by the same external force. Also presented are some statistical evidences that there exist conventional Phillips curves in Germany and France, but there is no causality link between unemployment and inflation as well.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 13641.

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Date of creation: 26 Feb 2009
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Handle: RePEc:pra:mprapa:13641

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Keywords: the Phillips curve; inflation; unemployment; causality;

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References

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  1. Kitov, Ivan & Kitov, Oleg & Dolinskaya, Svetlana, 2007. "Relationship between inflation, unemployment and labor force change rate in France: cointegration test," MPRA Paper 2736, University Library of Munich, Germany.
  2. James H. Stock & Mark W. Watson, 2008. "Phillips Curve Inflation Forecasts," NBER Working Papers 14322, National Bureau of Economic Research, Inc.
  3. Jeremy M. Piger & Robert H. Rasche, 2008. "Inflation: Do Expectations Trump the Gap?," International Journal of Central Banking, International Journal of Central Banking, vol. 4(4), pages 85-116, December.
  4. Kitov, Ivan, 2007. "Exact prediction of inflation and unemployment in Germany," MPRA Paper 5088, University Library of Munich, Germany.
  5. Ivan Kitov, 2007. "Exact Prediction of Inflation in the USA," Mechonomics mechonomics4, Socionet.
  6. Ivan Kitov, 2007. "Inflation, Unemployment, Labor Force Change in European Counties," Mechonomics mechonomics7, Socionet.
  7. Kitov, Ivan, 2007. "Exact prediction of inflation and unemployment in Canada," MPRA Paper 5015, University Library of Munich, Germany.
  8. Ivan O. Kitov & Oleg I. Kitov & Svetlana A. Dolinskaya, 2008. "Inflation as a function of labor force change rate: cointegration test for the USA," Papers 0811.0892, arXiv.org.
  9. Ivan O. KITOV & Oleg I. KITOV & Svetlana A. DOLINSKAYA, 2008. "Comprehensive Macro Ï¿½ Model For The Us Economy," Journal of Applied Economic Sciences, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, vol. 3(4(6)_Wint).
  10. Kitov, Ivan, 2007. "Exact prediction of inflation and unemployment in Japan," MPRA Paper 5464, University Library of Munich, Germany.
  11. Andrew Atkeson & Lee E. Ohanian., 2001. "Are Phillips curves useful for forecasting inflation?," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Win, pages 2-11.
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