This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Is the Phillips Curve a Curve? Some Evidence and Implications for Australia

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Guy Debelle (Reserve Bank of Australia)
James Vickery (Reserve Bank of Australia)

Additional information is available for the following registered author(s):

Abstract

The Phillips curve has generally been estimated in a linear framework. This paper investigates the possibility that the Phillips curve is indeed a curve, and shows that a convex short-run Phillips curve may be a more accurate representation of reality than the traditionally used linear specification. The paper also discusses the policy implications of convexity in the Phillips curve. These include the need for policy to be forward-looking and to act pre-emptively. Convexity provides a strong rationale for stabilisation policy, and it reinforces the need for policy-makers to proceed cautiously. It also implies that deep recessions may have only a marginally greater disinflationary impact than shallower ones, unless they induce large credibility bonuses.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help file. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.rba.gov.au/rdp/RDP9706.pdf
File Format: application/pdf
File Function:
Download Restriction: no

Publisher Info
Paper provided by Reserve Bank of Australia in its series RBA Research Discussion Papers with number rdp9706.

Download reference. The following formats are available: HTML, plain text, BibTeX, RIS (EndNote), ReDIF
Length:
Date of creation: Oct 1997
Date of revision:
Handle: RePEc:rba:rbardp:rdp9706

Contact details of provider:
Postal: GPO Box 3947, Sydney NSW 2001
Phone: 61-2-9551-8111
Fax: 61-2-9551-8000
Email:
Web page: http://www.rba.gov.au/
More information through EDIRC

Order Information:
Web: http://www.rba.gov.au/PublicationsAndResearch/RDP/RDP_Order/index.html

For technical questions regarding this item, or to correct its listing, contact: (Kylie Lowe).

Related research
Keywords: phillips curve monetary policy unemployment kalman filter

Other versions of this item:

Find related papers by JEL classification:
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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. Newey, Whitney K & West, Kenneth D, 1987. "A Simple, Positive Semi-definite, Heteroskedasticity and Autocorrelation Consistent Covariance Matrix," Econometrica, Econometric Society, vol. 55(3), pages 703-08, May. [Downloadable!] (restricted)
    Other versions:
  2. Stiglitz, Joseph, 1997. "Reflections on the Natural Rate Hypothesis," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 3-10, Winter. [Downloadable!] (restricted)
  3. Parkin, Michael, 1973. "The Short-Run and Long-Run Trade-Offs Between Inflation and Unemployment in Australia," Australian Economic Papers, Blackwell Publishing, vol. 12(21), pages 127-44, December.
  4. Gordon, Robert J, 1997. "The Time-Varying NAIRU and Its Implications for Economic Policy," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 11-32, Winter. [Downloadable!] (restricted)
    Other versions:
  5. repec:fth:harver:1418 is not listed on IDEAS
  6. Grosby, M. & Olekalns, N., 1996. "Inflation, Unemployment and the NAIRU in Australia," Papers 96/31, New South Wales - School of Economics.
    Other versions:
  7. J. Bradford De Long & Lawrence H. Summers, . "How Does Macroeconomic Policy Matter?," J. Bradford De Long's Working Papers _130, University of California at Berkeley, Economics Department. [Downloadable!]
  8. Simes, R M & Richardson, C J, 1987. "Wage Determination in Australia," The Economic Record, The Economic Society of Australia, vol. 63(181), pages 144-55, June.
  9. Willem H. Buiter & Marcus H. Miller, 1986. "Costs and Benefits of an Anti-Inflationary Policy: Questions and Issues," NBER Working Papers 1252, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. Staiger, Douglas & Stock, James H & Watson, Mark W, 1997. "The NAIRU, Unemployment and Monetary Policy," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 33-49, Winter. [Downloadable!] (restricted)
  11. Roberto Chang, 1997. "Is low unemployment inflationary?," Economic Review, Federal Reserve Bank of Atlanta, issue Q I, pages 4-13. [Downloadable!]
  12. Mitchell, William F, 1987. "The Nairu, Structural Imbalance and the Macroequilibrium Unemployment Rate," Australian Economic Papers, Blackwell Publishing, vol. 26(48), pages 101-18, June.
  13. Marco A. Espinosa-Vega & Steven Russell, 1997. "History and theory of the NAIRU: a critical review," Economic Review, Federal Reserve Bank of Atlanta, issue Q 2, pages 4-25. [Downloadable!]
  14. Gregory, R G, 1986. "Wages Policy and Unemployment in Australia," Economica, London School of Economics and Political Science, vol. 53(210(S)), pages S53-74, Supplemen. [Downloadable!] (restricted)
  15. Robert Ford & Douglas Laxton, 1995. "World Public Debt and Real Interest Rates," IMF Working Papers 95/30, International Monetary Fund.
    Other versions:
  16. Roberts, John M., 1997. "Is inflation sticky?," Journal of Monetary Economics, Elsevier, vol. 39(2), pages 173-196, July. [Downloadable!] (restricted)
    Other versions:
  17. Robert J. Gordon, 1970. "The Recent Acceleration of Inflation and Its Lessons for the Future," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 1(1970-1), pages 8-47. [Downloadable!]
  18. Fischer, Stanley, 1977. "Long-Term Contracts, Rational Expectations, and the Optimal Money Supply Rule," Journal of Political Economy, University of Chicago Press, vol. 85(1), pages 191-205, February. [Downloadable!] (restricted)
  19. Kenneth Kuttner, 1992. "Monetary policy with uncertain estimates of potential output," Economic Perspectives, Federal Reserve Bank of Chicago, issue Jan, pages 2-15.
  20. Jonson, P D & Mahar, K L & Thompson, G J, 1974. "Earnings and Award Wages in Australia," Australian Economic Papers, Blackwell Publishing, vol. 13(22), pages 80-98, June.
Full references

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. David Gruen & Adrian Pagan & Christopher Thompson, 1999. "The Phillips Curve in Australia," RBA Research Discussion Papers rdp1999-01, Reserve Bank of Australia. [Downloadable!]
    Other versions:
  2. Charles Wyplosz, 2001. "Do we know how low inflation should be?," HEI Working Papers 06-2001, Economics Section, The Graduate Institute of International Studies. [Downloadable!]
    Other versions:
  3. Eliasson, Ann-Charlotte, 2001. "Is the Short-run Phillips Curve Nonlinear? Empirical Evidence for Australia, Sweden and the United States," Working Paper Series 124, Sveriges Riksbank (Central Bank of Sweden). [Downloadable!]
  4. Jeff Borland & Ian McDonald, 2000. "Labour Market Models of Unemployment in Australia," Melbourne Institute Working Paper Series wp2000n15, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne. [Downloadable!]
  5. Mardi Dungey & John Pitchford, 2001. "An Empirical Analysis of the Effect of Growth on Inflation, Australia, Canada and the United States," Discussion Papers 438, Centre for Economic Policy Research, Research School of Social Sciences, Australian National University. [Downloadable!]
  6. Peter Isard & Douglas Laxton & Ann-Charlotte Eliasson, 2001. "Inflation Targeting with NAIRU Uncertainty and Endogenous Policy Credibility," IMF Working Papers 01/7, International Monetary Fund. [Downloadable!]
    Other versions:
  7. Richard A. Ashley & Randall J. Verbrugge., 2006. "Mis-Specification in Phillips Curve Regressions: Quantifying Frequency Dependence in This Relationship While Allowing for Feedback," Working Papers e06-11, Virginia Polytechnic Institute and State University, Department of Economics. [Downloadable!]
  8. Pui Chi Ip, 2004. "Inflation and Growth Targeting," Research Papers 0401, Macquarie University, Department of Economics. [Downloadable!]
  9. 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)
  10. Gordon de Brouwer, 1998. "Estimating Output Gaps," RBA Research Discussion Papers rdp9809, Reserve Bank of Australia. [Downloadable!]
  11. Mardi Dungey & John Pitchford, 1999. "The Steady Inflation Rate of Economic Growth," Discussion Papers 414, Centre for Economic Policy Research, Research School of Social Sciences, Australian National University. [Downloadable!]
    Other versions:
  12. James Vickery, 1999. "Unemployment and Skills in Australia," RBA Research Discussion Papers rdp1999-12, Reserve Bank of Australia. [Downloadable!]
  13. Angelica E. Njuguna & Stephen N. Karingi & Mwangi S. Kimenyi, 2005. "Measuring Potential Output and Output Gap and Macroeconomic Policy: The Case of Kenya," Working papers 2005-45, University of Connecticut, Department of Economics. [Downloadable!]
Statistics
Access and download statistics

Did you know? IDEAS also indexes book chapters.

This page was last updated on 2008-7-7.


This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.