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Asymmetric output-gap effects in Phillips Curve and mark-up pricing models: Evidence for the US and the UK

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  • Michael P. Clements
  • Marianne Sensier

Abstract

A number of studies have found an asymmetric response of consumer price index inflation to the output gap in the US in simple Phillips curve models. We consider whether there are similar asymmetries in mark-up pricing models, that is, whether the mark-up over producers' costs also depends upon the sign of the (adjusted) output gap. The robustness of our findings to the price series is assessed, and also whether price-output responses in the UK are asymmetric. Copyright (c) Scottish Economic Society 2003.

Suggested Citation

  • Michael P. Clements & Marianne Sensier, 2003. "Asymmetric output-gap effects in Phillips Curve and mark-up pricing models: Evidence for the US and the UK," Scottish Journal of Political Economy, Scottish Economic Society, vol. 50(4), pages 359-374, September.
  • Handle: RePEc:bla:scotjp:v:50:y:2003:i:4:p:359-374
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    Cited by:

    1. Correa, Arnildo da Silva & Minella, André, 2010. "Nonlinear Mechanisms of the Exchange Rate Pass-Through: A Phillips Curve Model with Threshold for Brazil," Revista Brasileira de Economia - RBE, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil), vol. 64(3), September.
    2. Abbas Valadkhani, 2015. "Asymmetric size-dependent effects of the output gap on inflation: US evidence from the last half a century," Applied Economics, Taylor & Francis Journals, vol. 47(33), pages 3525-3539, July.
    3. Denise R. Osborn & Marianne Sensier, 2009. "Uk Inflation: Persistence, Seasonality And Monetary Policy," Scottish Journal of Political Economy, Scottish Economic Society, pages 24-44.
    4. Bjørnstad, Roger & Kalstad, Kjartan Øren, 2010. "Increased price markup from union coordination: OECD panel evidence," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 4, pages 1-37.
    5. Michael Arghyrou & Christopher Martin & Costas Milas, 2005. "Non-linear inflationary dynamics: evidence from the UK," Oxford Economic Papers, Oxford University Press, pages 51-69.
    6. repec:eee:reveco:v:51:y:2017:i:c:p:245-257 is not listed on IDEAS
    7. Alessandra Dal Colle, 2011. "Finance–growth nexus: does causality withstand financial liberalization? Evidence from cointegrated VAR," Empirical Economics, Springer, pages 127-154.
    8. Christopher Martin & Michael Arghyrou & Costas Milas, 2004. "Nonlinear inflation dynamics: evidence from the UK," Money Macro and Finance (MMF) Research Group Conference 2003 59, Money Macro and Finance Research Group.
    9. Tatiana Kirsanova & Simon Wren‐Lewis, 2012. "Optimal Fiscal Feedback on Debt in an Economy with Nominal Rigidities," Economic Journal, Royal Economic Society, vol. 122(559), pages 238-264, March.
    10. Michael Ellington & Costas Milas, 2014. "Global liquidity, money growth and UK inflation," Working Paper series 21_14, Rimini Centre for Economic Analysis.
    11. D R Osborn & M Sensier, 2004. "Modelling UK Inflation: Persistence, Seasonality and Monetary Policy," Centre for Growth and Business Cycle Research Discussion Paper Series 46, Economics, The Univeristy of Manchester.
    12. Valadkhani, Abbas, 2014. "Switching impacts of the output gap on inflation: Evidence from Canada, the UK and the US," International Review of Economics & Finance, Elsevier, vol. 33(C), pages 270-285.

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