How do Beveridge and Phillips curves in the euro area behave under the stress of the world economic crisis?
AbstractIn this paper, the authors present a new concept of the 'modified output gap' based on the New Keynesian Phillips curve and on the Beveridge curve. In the first part of the paper, both mentioned curves are derived analytically. In doing so, we identify key parameters for the shift of the Beveridge curve (up- or downwards) and prove that - fulfilling a minimum of assumptions - the New Keynesian Phillips curve is (also) a falling convex relationship between the inflation rate and the unemployment rate in the tradition of Phillips (1958). Inserting the Phillips curve into the Beveridge curve reveals the explicit positive relationship between the vacancy ratio and the inflation rate. In the second part of the paper, we put all three relationships under an empirical 'stress test' using panel data from eleven of the EA 12 countries for three different samples during the world economic crisis: In all cases, the parameter estimates confirm the presumed existence of the three functions. --
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Universität der Bundeswehr München, Economic Research Group in its series Working Papers in Economics with number 2013,1.
Date of creation: 2013
Date of revision:
Contact details of provider:
Postal: Werner-Heisenberg-Weg 39, D-85577 Neubiberg
Phone: +49(0)89 - 6004-4239
Fax: +49(0)89 - 6014693
Web page: http://wow.w3.rz.unibw-muenchen.de/
More information through EDIRC
labor market; Phillips and Beveridge curves; policy ineffectiveness; world economic crisis and output gap;
Find related papers by JEL classification:
- J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
- J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
This paper has been announced in the following NEP Reports:
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.:
- Dave Turner & Elena Seghezza, 1999. "Testing for a Common OECD Phillips Curve," OECD Economics Department Working Papers 219, OECD Publishing.
- Borsch-Supan, Axel H, 1991. "Panel Data Analysis of the Beveridge Curve: Is There a Macroeconomic Relation between the Rate of Unemployment and the Vacancy Rate?," Economica, London School of Economics and Political Science, vol. 58(231), pages 279-97, August.
- Zheng Liu & Glenn Rudebusch, 2010. "Inflation: mind the gap," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue jan19.
- Ken Kuttner & Tim Robinson, 2008.
"Understanding the Flattening Phillips Curve,"
Department of Economics Working Papers
2008-15, Department of Economics, Williams College.
- Kuttner, Ken & Robinson, Tim, 2010. "Understanding the flattening Phillips curve," The North American Journal of Economics and Finance, Elsevier, vol. 21(2), pages 110-125, August.
- Pierre Cahuc & AndrÃ© Zylberberg, 2004. "Labor Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 026203316x, January.
- Gali, Jordi & Gertler, Mark, 1999.
"Inflation dynamics: A structural econometric analysis,"
Journal of Monetary Economics,
Elsevier, vol. 44(2), pages 195-222, October.
- Jordi Gali & Mark Gertler, 2000. "Inflation Dynamics: A Structural Econometric Analysis," NBER Working Papers 7551, National Bureau of Economic Research, Inc.
- Jordi Galí & Mark Gertler, 1998. "Inflation dynamics: A structural econometric analysis," Economics Working Papers 341, Department of Economics and Business, Universitat Pompeu Fabra.
- Robert Shimer, 2005. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies," American Economic Review, American Economic Association, vol. 95(1), pages 25-49, March.
- Warren, Ronald S, Jr, 1983. "Labor Market Contacts, Unanticipated Wages, and Employment Growth," American Economic Review, American Economic Association, vol. 73(3), pages 389-97, June.
- Wall, Howard J & Zoega, Gylfi, 2002.
" The British Beveridge Curve: A Tale of Ten Regions,"
Oxford Bulletin of Economics and Statistics,
Department of Economics, University of Oxford, vol. 64(3), pages 261-80, July.
- Howard J. Wall & Gylfi Zoega, 2001. "The British Beveridge curve: a tale of ten regions," Working Papers 2001-007, Federal Reserve Bank of St. Louis.
- Wall, Howard & Zoega, Gylfi, 1997. "The British Beveridge Curve: A Tale of Ten Regions," CEPR Discussion Papers 1771, C.E.P.R. Discussion Papers.
- Scheufele, Rolf, 2010.
"Evaluating the German (New Keynesian) Phillips curve,"
The North American Journal of Economics and Finance,
Elsevier, vol. 21(2), pages 145-164, August.
- Rolf Scheufele, 2008. "Evaluating the German (New Keynesian) Phillips Curve," IWH Discussion Papers 10, Halle Institute for Economic Research.
- Calvo, Guillermo A., 1983. "Staggered prices in a utility-maximizing framework," Journal of Monetary Economics, Elsevier, vol. 12(3), pages 383-398, September.
- Carl E. Walsh, 2003. "Monetary Theory and Policy, 2nd Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232316, January.
- Oliver Jean Blanchard & Peter Diamond, 1989. "The Beveridge Curve," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 20(1), pages 1-76.
- Kevin L. Kliesen, 2010. "Inflation may be the next dragon to slay," The Regional Economist, Federal Reserve Bank of St. Louis, issue Jan, pages 4-9.
- Anthony De Francesco, 1999. "The relationship between unemployment and vacancies in Australia," Applied Economics, Taylor & Francis Journals, vol. 31(5), pages 641-652.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics).
If references are entirely missing, you can add them using this form.