IDEAS home Printed from https://ideas.repec.org/a/ids/ijmefi/v12y2019i2p118-132.html
   My bibliography  Save this article

Does the US economy face a long run trade off between inflation and unemployment?

Author

Listed:
  • Jamil Sayeed
  • Md. Deen Islam
  • Shanjida Yasmin

Abstract

As average inflation expectations anchored at the inflation target since 2000 in the USA, the long run Phillips curve may have become downward sloping. Since the great recession 2008-2009, the US economy has experienced an average of 0.22% points of undershooting of the inflation target over the period 2008Q1-2017Q4. This study finds that the long run Phillips curve for the USA has become flatter since 2008. Our estimates show that the US economy faced 1.6% points of higher average unemployment than what would have been the case if average inflation had been equal to the target. This is a significant unemployment cost resulting from both a flatter long run Phillips curve and an undershooting of the inflation target. Our findings suggest that the US economy has been facing a long run trade off between inflation and unemployment since the financial crisis.

Suggested Citation

  • Jamil Sayeed & Md. Deen Islam & Shanjida Yasmin, 2019. "Does the US economy face a long run trade off between inflation and unemployment?," International Journal of Monetary Economics and Finance, Inderscience Enterprises Ltd, vol. 12(2), pages 118-132.
    • Handle: RePEc:ids:ijmefi:v:12:y:2019:i:2:p:118-132
    as

    Download full text from publisher

    File URL: http://www.inderscience.com/link.php?id=100264
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ids:ijmefi:v:12:y:2019:i:2:p:118-132. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sarah Parker (email available below). General contact details of provider: http://www.inderscience.com/browse/index.php?journalID=218 .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.