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New Keynesian Phillips Curve for Romania

Author

Listed:
  • Saman, Corina

    () (Institute for Economic Forecasting, Romanian Academy.)

  • Pauna, Bianca

    () (National Institute of Economic Research, Center for Macroeconomic Modeling, Romanian Academy.)

Abstract

The paper aims to estimate the New Keynesian Phillips curve in the case of Romanian economy. The empirical model estimates simultaneously the potential output and the output gap; the natural rate of unemployment and the cyclical unemployment as an Okun Law type relationship; and the New Phillips curve linking inflation to output gap. We estimated two models that differed only in the assumption regarding the speed of adjustment of the cyclical unemployment to changes in output. The estimation results proved that the Phillips curve is not very different. It can be observed that the forwardlooking component of the NKPC is only marginally larger than the backward looking component in both specifications.

Suggested Citation

  • Saman, Corina & Pauna, Bianca, 2013. "New Keynesian Phillips Curve for Romania," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 159-171, June.
  • Handle: RePEc:rjr:romjef:v::y:2013:i:2:p:159-171
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    File URL: http://www.ipe.ro/rjef/rjef2_13/rjef2_2013p159-171.pdf
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    References listed on IDEAS

    as
    1. Beveridge, Stephen & Nelson, Charles R., 1981. "A new approach to decomposition of economic time series into permanent and transitory components with particular attention to measurement of the `business cycle'," Journal of Monetary Economics, Elsevier, vol. 7(2), pages 151-174.
    2. Sbordone, Argia M., 2005. "Do expected future marginal costs drive inflation dynamics?," Journal of Monetary Economics, Elsevier, vol. 52(6), pages 1183-1197, September.
    3. Rudd, Jeremy & Whelan, Karl, 2005. "New tests of the new-Keynesian Phillips curve," Journal of Monetary Economics, Elsevier, vol. 52(6), pages 1167-1181, September.
    4. Gali, Jordi & Gertler, Mark & Lopez-Salido, J. David, 2001. "European inflation dynamics," European Economic Review, Elsevier, vol. 45(7), pages 1237-1270.
    5. Dobrescu, Emilian, 1996. "Macromodels of the Romanian transition Economy," MPRA Paper 35810, University Library of Munich, Germany.
    6. Dobrescu, Emilian, 2009. "Measuring the Interaction of Structural Changes with Inflation," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 6(5), pages 5-99.
    7. John M. Roberts, 1998. "Inflation expectations and the transmission of monetary policy," Finance and Economics Discussion Series 1998-43, Board of Governors of the Federal Reserve System (U.S.).
    8. Zhang, Chengsi & Murasawa, Yasutomo, 2011. "Output gap measurement and the New Keynesian Phillips curve for China," Economic Modelling, Elsevier, vol. 28(6), pages 2462-2468.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. repec:ntu:ntcmss:vol5-iss1-17-36 is not listed on IDEAS
    2. Lucian Croitoru, 2014. "Will there be Deflation and Current Account Surpluses?," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 5-21, October.
    3. repec:rjr:romjef:v::y:2017:i:2:p:79-93 is not listed on IDEAS
    4. repec:exl:25engi:v:27:y:2016:i:3:p:276-284 is not listed on IDEAS

    More about this item

    Keywords

    New Keynesian Phillips curve; Inflation; Potential output;

    JEL classification:

    • 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
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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