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The phillips curve and US macroeconomic performance during the 1990s

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  • Mark Setterfield
  • Kristen Leblond

Abstract

This paper identifies two competing accounts of recent US macroeconomic performance, both of which are capable of explaining the concurrence of low unemployment and low inflation experienced by the US after 1995. Econometric evidence provides partial support for both views, establishing that while there has been no change in the position of the long run Phillips curve in the US during the 1990s, this long run Phillips curve is likely not vertical. These results suggest that recent US macroeconomic performance is not sustainable and that US policy makers ultimately face a choice between higher unemployment or higher inflation in the long run.

Suggested Citation

  • Mark Setterfield & Kristen Leblond, 2003. "The phillips curve and US macroeconomic performance during the 1990s," International Review of Applied Economics, Taylor & Francis Journals, vol. 17(4), pages 361-376.
    • Handle: RePEc:taf:irapec:v:17:y:2003:i:4:p:361-376
    DOI: 10.1080/0269217032000118729
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    References listed on IDEAS

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    Cited by:

    1. Funk Peter & Kromen Bettina, 2010. "Inflation and Innovation-Driven Growth," The B.E. Journal of Macroeconomics, De Gruyter, vol. 10(1), pages 1-52, August.
    2. Skare, Marinko, 2010. "Can there be a 'golden triangle' of internal equilibrium?," Journal of Policy Modeling, Elsevier, vol. 32(4), pages 562-573, July.
    3. Ricardo Summa & Julia Braga, 2020. "The (conflict-augmented) Phillips Curve is alive and well," Working Papers 0055, ASTRIL - Associazione Studi e Ricerche Interdisciplinari sul Lavoro.
    4. Peter Funk & Bettina Kromen, 2006. "Short-term price rigidity in an endogenous growth model: Non-Superneutrality and a non-vertical long-term Phillips-curve," Working Paper Series in Economics 29, University of Cologne, Department of Economics.
    5. Franklin Serrano & Ricardo Summa, 2015. "Distribution and Cost-Push inflation in Brazil under inflation targeting, 1999-2014," Centro Sraffa Working Papers CSWP14, Centro di Ricerche e Documentazione 'Piero Sraffa'.
    6. Burkhard Heer & Alfred Maussner, 2011. "The Cash-In-Advance Constraint in Monetary Growth Models," CESifo Working Paper Series 3647, CESifo.
    7. Dany Lang & Mark Setterfield, 2012. "Faith-based Macroeconomics: A Critique of Recent Developments in NAIRU Estimation," Chapters, in: Claude Gnos & Louis-Philippe Rochon & Domenica Tropeano (ed.), Employment, Growth and Development, chapter 5, Edward Elgar Publishing.

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