IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

Flattening of the Phillips Curve: Estimations and consequences for economic policy

Listed author(s):
  • Jürgen Kromphardt

    ()

    (Technical University, Berlin)

  • Camille Logeay

    (University of Applied Sciences HTW Berlin)

We test the hypothesis that the long-term Phillips curve is downward sloping and has become flatter in the last 10 to 15 years. Controlling for the most important other factors influencing the inflation rate, we estimate cointegrations and test whether a "break" in the Phillips curve can be detected. We restrict our study to Germany, France, Italy, Spain, the UK and the USA. The results vary considerably between the countries, but all exhibit a downward sloping long-run Phillips curve and show the presumed "break". First we explain the results by changes in the wage or price setting circumstance. Then we critically discuss explanations based on the time-varying NAIRU and put against them explanations based on aggregate demand and hysteresis. In the conclusion, some consequences for economic policy are indicated.

If 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.

File URL: http://www.elgaronline.com/view/journals/ejeep/8-1/ejeep.2011.01.05.xml
Download Restriction: no

Article provided by Edward Elgar Publishing in its journal Intervention. European Journal of Economics and Economic Policies.

Volume (Year): 8 (2011)
Issue (Month): 1 ()
Pages: 43-67

as
in new window

Handle: RePEc:elg:ejeepi:v:8:y:2011:i:1:p43-67
Contact details of provider: Web page: http://www.elgaronline.com/ejeep

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.:

as
in new window


  1. Anonymous, 0. "1981 November," CWAE Newsletter, Agricultural and Applied Economics Association, Committee on Women in Agricultural Economics (CWAE).
  2. Laurence Ball & N. Gregory Mankiw, 2002. "The NAIRU in Theory and Practice," Journal of Economic Perspectives, American Economic Association, vol. 16(4), pages 115-136, Fall.
  3. Olivier Blanchard & Lawrence F. Katz, 1997. "What We Know and Do Not Know about the Natural Rate of Unemployment," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 51-72, Winter.
  4. Laurence Ball, 1999. "Aggregate demand and Long-Run Unemployment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 30(2), pages 189-252.
  5. Olivier J. Blanchard & Lawrence H. Summers, 1986. "Hysteresis and the European Unemployment Problem," NBER Chapters, in: NBER Macroeconomics Annual 1986, Volume 1, pages 15-90 National Bureau of Economic Research, Inc.
  6. Ball, Laurence, 1994. "Credible Disinflation with Staggered Price-Setting," American Economic Review, American Economic Association, vol. 84(1), pages 282-289, March.
  7. Grant, Alan P. & Thomas, Lloyd B., 1999. "Inflationary expectations and rationality revisited," Economics Letters, Elsevier, vol. 62(3), pages 331-338, March.
  8. Beyer, Andreas & Farmer, Roger E.A., 2007. "Natural rate doubts," Journal of Economic Dynamics and Control, Elsevier, vol. 31(3), pages 797-825, March.
  9. Anonymous & Popp, Jennie, 0. "2001 Fall," CWAE Newsletter, Agricultural and Applied Economics Association, Committee on Women in Agricultural Economics (CWAE).
  10. Andrews, Donald W K, 1993. "Tests for Parameter Instability and Structural Change with Unknown Change Point," Econometrica, Econometric Society, vol. 61(4), pages 821-856, July.
  11. Lawrence J. Christiano & Martin Eichenbaum & Charles L. Evans, 2005. "Nominal Rigidities and the Dynamic Effects of a Shock to Monetary Policy," Journal of Political Economy, University of Chicago Press, vol. 113(1), pages 1-45, February.
  12. Philip Arestis & Malcolm Sawyer, 2005. "Aggregate demand, conflict and capacity in the inflationary process," Cambridge Journal of Economics, Oxford University Press, vol. 29(6), pages 959-974, November.
  13. Anonymous & Marks, Leonie A., 0. "2005 Summer," CWAE Newsletter, Agricultural and Applied Economics Association, Committee on Women in Agricultural Economics (CWAE).
  14. Hansen, Bruce E., 2000. "Testing for structural change in conditional models," Journal of Econometrics, Elsevier, vol. 97(1), pages 93-115, July.
  15. Anonymous, 0. "1997 Fall," CWAE Newsletter, Agricultural and Applied Economics Association, Committee on Women in Agricultural Economics (CWAE).
  16. Andrews, Donald W K & Ploberger, Werner, 1994. "Optimal Tests When a Nuisance Parameter Is Present Only under the Alternative," Econometrica, Econometric Society, vol. 62(6), pages 1383-1414, November.
  17. Blanchard, Olivier J. & Summers, Lawrence H., 1987. "Hysteresis in unemployment," European Economic Review, Elsevier, vol. 31(1-2), pages 288-295.
  18. Anonymous & DeVuyst, Cheryl, 0. "2001 Spring," CWAE Newsletter, Agricultural and Applied Economics Association, Committee on Women in Agricultural Economics (CWAE).
  19. Anonymous, 0. "1997 April," CWAE Newsletter, Agricultural and Applied Economics Association, Committee on Women in Agricultural Economics (CWAE).
  20. Olivier Blanchard, 2007. "A Review of Richard Layard, Stephen Nickell, and Richard Jackman's Unemployment: Macroeconomic Performance and the Labour Market," Journal of Economic Literature, American Economic Association, vol. 45(2), pages 410-418, June.
  21. Anonymous & Hamm, Shannon, 0. "1998 Summer," CWAE Newsletter, Agricultural and Applied Economics Association, Committee on Women in Agricultural Economics (CWAE).
  22. Anonymous & Newton, Doris, 0. "2004 Summer," CWAE Newsletter, Agricultural and Applied Economics Association, Committee on Women in Agricultural Economics (CWAE).
  23. Anonymous & Popp, Jennie, 0. "2002 Summer," CWAE Newsletter, Agricultural and Applied Economics Association, Committee on Women in Agricultural Economics (CWAE).
  24. Anonymous & DeVuyst, Cheryl, 0. "2000 Summer," CWAE Newsletter, Agricultural and Applied Economics Association, Committee on Women in Agricultural Economics (CWAE).
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:elg:ejeepi:v:8:y:2011:i:1:p43-67. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Helen Craven)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.