IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

Do Aggregate Demand Factors Influence Current Inflation Developments?

The relationship between inflation developments and aggregate demand is usually modeled with a Phillips curve. This study estimates the Phillips curve for Austria and, for the sake of comparison, for the euro area as well as for four euro area member countries. In order to test the robustness of our results, we estimate both the traditional and the New Keynesian Phillips Curve (NKPC) for the period from 1970 to 2007. We also investigate whether the relationship between economic activity and inflation has changed over time. The results show that there was indeed a significant relationship between inflation and the output gap in most countries; but its coefficient diminished over the years, and became insignificant in almost all countries toward the end of the estimation period. Exceptions are Austria and the Netherlands: For these countries the estimates are not significant, and for Austria we get contradictory results. We can conclude from this and from the observation that the output gap in the countries under review is now slightly negative, or at best closed, that the current rise in inflation is not the result of an overheating economy.

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:
Download Restriction: no

Article provided by Oesterreichische Nationalbank (Austrian Central Bank) in its journal Monetary Policy & the Economy.

Volume (Year): (2008)
Issue (Month): 2 ()
Pages: 10-82

in new window

Handle: RePEc:onb:oenbmp:y:2008:i:2:b:3
Contact details of provider: Postal:
P.O. Box 61, A-1011 Vienna, Austria

Phone: +43/1/404 20 7405
Fax: +43/1/404 20 7499
Web page:

More information through EDIRC

Order Information: Postal: Oesterreichische Nationalbank, Documentation Management and Communications Services, Otto-Wagner Platz 3, A-1090 Vienna, Austria

No references listed on IDEAS
You can help add them by filling out this form.

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:onb:oenbmp:y:2008:i:2:b:3. 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: (Claudia Kwapil)

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.