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Der Beitrag alternativer NAIRU-Kurven zur Erklärung der Inflation
[The Contribution of Alternative NAIRU-curves to the Explanation of Inflation]

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  • Quaas, Georg
  • Klein, Mathias

Abstract

The Non-Accelerating Inflation Rate of Unemployment (NAIRU) is a major concept in (monetary) economics in predicting changes in the inflation rate. As the inflation neutral unemployment rate is an unobserved and, in the long run, a changing variable, several questions arise about its adequate estimation. The following study determines four different possible NAIRU-curves for the German economy during the period of 1973Q1-2010Q2 by the use of a State-Space-Model. With the help of the Ordinary-Least-Square (OLS) and the Maximum-Likelihood (ML) method, these curves are implemented and utilized in regression models which are trimmed to satisfactorily explain inflation changes. It turns out that besides the NAIRU, several other variables like the changes in the unemployment rate or the labor productivity are necessary to forecast changes in the inflation rate accurately. Among the four regression models, the one applying the NAIRU with the lowest variance and with a high theoretic plausibility has the worst record, while the equation with a NAIRU fluctuating more than the unemployment rate explains the inflation rate best.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 26176.

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Date of creation: 25 Oct 2010
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Handle: RePEc:pra:mprapa:26176

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Keywords: Non-Accelerating Inflation Rate of Unemployment; NAIRU;

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  1. Galí, Jordi, 2010. "The Return of the Wage Phillips Curve," CEPR Discussion Papers 7700, C.E.P.R. Discussion Papers.
  2. Gordon, Robert J, 1996. "The Time-varying NAIRU and its Implications for Economic Policy," CEPR Discussion Papers 1492, C.E.P.R. Discussion Papers.
  3. Fitzenberger, Bernd & Franz, Wolfgang & Bode, Oliver, 2007. "The Phillips Curve and NAIRU Revisited: New Estimates for Germany," ZEW Discussion Papers 07-070, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  4. Joseph Stiglitz, 1997. "Reflections on the Natural Rate Hypothesis," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 3-10, Winter.
  5. Roberts, John M, 1995. "New Keynesian Economics and the Phillips Curve," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(4), pages 975-84, November.
  6. Franz, Wolfgang, 2000. "Neues von der NAIRU?," ZEW Discussion Papers 00-41, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  7. Robert J. Gordon, 1990. "The Phillips Curve Now and Then," NBER Working Papers 3393, National Bureau of Economic Research, Inc.
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