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UK Phillips curves and monetary policy

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  • Haldane, Andrew
  • Quah, Danny

Abstract

This paper documents some stylized facts on evolving UK Phillips curves, and shows how these differ from their US versions. We interpret UK Phillips curve dynamics in a positive theory of monetary policy û how policy-maker attitudes on the Phillips curve have evolved since the 1950s û rather than, more traditionally, as interaction between exogenous demand and supply disturbances. Combining this framework with reasoned conjectures on how policy-makers' beliefs have changed helps explain some features of the evolving UK Phillips curve. We suggest that correlations suggesting an extreme favorable unemployment-inflation tradeoff might indicate not something to be exploited but instead only policy-makers' correctly acknowledging that no tradeoff exists.
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Suggested Citation

  • Haldane, Andrew & Quah, Danny, 1999. "UK Phillips curves and monetary policy," Journal of Monetary Economics, Elsevier, vol. 44(2), pages 259-278, October.
  • Handle: RePEc:eee:moneco:v:44:y:1999:i:2:p:259-278
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    Cited by:

    1. Jan J. J. Groen & Richard Paap & Francesco Ravazzolo, 2013. "Real-Time Inflation Forecasting in a Changing World," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 31(1), pages 29-44, January.
    2. Luca Benati, 2003. "Evolving Post-World War II U.K. Economic Performance," Computing in Economics and Finance 2003 171, Society for Computational Economics.
    3. Rebecca L Driver & Jennifer V Greenslade & Richard G Pierse, 2003. "The role of expectations in estimates of the NAIRU in the United States and the United Kingdom," Bank of England working papers 180, Bank of England.
    4. repec:eee:joecas:v:14:y:2016:i:pa:p:20-28 is not listed on IDEAS
    5. Stefan Gerlach & Reamonn Lydon & Rebecca Stuart, 2016. "Unemployment and inflation in Ireland: 1926–2012," Cliometrica, Springer;Cliometric Society (Association Francaise de Cliométrie), vol. 10(3), pages 345-364, September.
    6. Nelson, Edward & Nikolov, Kalin, 2004. "Monetary Policy and Stagflation in the UK," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(3), pages 293-318, June.
    7. Alessandra Iacobucci & Alain Noullez, 2005. "A Frequency Selective Filter for Short-Length Time Series," Computational Economics, Springer;Society for Computational Economics, vol. 25(1), pages 75-102, February.
    8. Thierry Warin, 2006. "From Full Employment to the Natural Rate of Unemployment: A Survey," Middlebury College Working Paper Series 0601, Middlebury College, Department of Economics.
    9. Alessandra Iacobucci, 2003. "Spectral Analysis for Economic Time Series," Documents de Travail de l'OFCE 2003-07, Observatoire Francais des Conjonctures Economiques (OFCE).
    10. Girardi, Riccardo & Paruolo, Paolo, 2013. "Wages and prices in Europe before and after the onset of the Monetary Union," Economic Modelling, Elsevier, vol. 35(C), pages 643-653.
    11. Nelson, Edward, 2001. "What Does the UK's Monetary Policy and Inflation Experience Tell Us About the Transmission Mechanism?," CEPR Discussion Papers 3047, C.E.P.R. Discussion Papers.
    12. Richard Mash, 2000. "The Time Inconsistency of Monetary Policy with Inflation Persistence," Economics Series Working Papers 15, University of Oxford, Department of Economics.
    13. David Mayes & Matti Viren, 2002. "Asymmetry and the Problem of Aggregation in the Euro Area," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 29(1), pages 47-73, March.
    14. Luca Benati, 2001. "Band-pass filtering, cointegration, and business cycle analysis," Bank of England working papers 142, Bank of England.
    15. Mayes, David & Virén, Matti, 2004. "Asymmetries in the Euro area economy," Research Discussion Papers 9/2004, Bank of Finland.
    16. Yesim Kustepeli, 2005. "A comprehensive short-run analysis of a (possible) Turkish Phillips curve," Applied Economics, Taylor & Francis Journals, vol. 37(5), pages 581-591.
    17. Ravi Balakrishnan & J David Lopez-Salido, 2002. "Understanding UK inflation: the role of openness," Bank of England working papers 164, Bank of England.
    18. Palacios González, F., 2001. "Inflación y paro. ¿Variables condicionalmente independientes en el sistema macroeconómico?," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 19, pages 87-105, Diciembre.
    19. Eric Parrado, 2004. "Singapore's Unique Monetary Policy; How Does it Work?," IMF Working Papers 04/10, International Monetary Fund.
    20. Tachibana, Minoru, 2004. "Central Banks' preferences in Japan, the UK, and the US," Japan and the World Economy, Elsevier, vol. 16(1), pages 81-93, January.
    21. Juncal Cunnado & Fernando PErez De Gracia, 2003. "Sacrifice Ratios: Some lessons from EMU countries, 1960-2001," International Review of Applied Economics, Taylor & Francis Journals, vol. 17(3), pages 327-337.
    22. Juncal Cunado Eizaguirre & Fernando PÈrez de GracÌa Hidalgo, "undated". "Tasa de sacrificio en la UEM: Un an·lisis empÌrico," Studies on the Spanish Economy 70, FEDEA.
    23. Alfonso Mendoza V., 2003. "The Inflation-Output Volatility Tradeoff and Exchange Rate Shocks in Mexico and Turkey," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 3(1), pages 27-51.
    24. Schreiber, Sven & Wolters, Jurgen, 2007. "The long-run Phillips curve revisited: Is the NAIRU framework data-consistent?," Journal of Macroeconomics, Elsevier, vol. 29(2), pages 355-367, June.
    25. Doyle, Matthew, 2006. "Empirical Phillips Curves in OECD Countries: Has There Been A Common Breakdown?," Staff General Research Papers Archive 12684, Iowa State University, Department of Economics.

    More about this item

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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