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Mr Phillips and the medium-run: temporal instability vs. frequency stability

Author

Listed:
  • Michele Fratianni

    (Kelley School of Business, Bloomington, Indiana, USA and Universita' Politecnica delle Marche, Ancona, Italy)

  • Marco Gallegati

    (Dipartimento di Scienze Economiche e Sociali - Universita' Politecnica delle Marche, Ancona, Italy)

  • Federico Giri

    (Dipartimento di Scienze Economiche e Sociali - Universita' Politecnica delle Marche, Ancona, Italy)

Abstract

The paper goes back to the original insight by Phillips and investigates the negative relationship between money wage inflation and the unemployment rate occurring at frequency bands that stretch beyond those of the business cycle. We use UK annual data for the period 1861-2015, and post- WWII quarterly data from 1960 to 2016. The two critical findings are that the wage Phillips Curve is predominantly a medium-run phenomenon, comprised in the 8-to16-year frequency band, and that the curve disappears beyond this range. Similar conclusions are reached using the post-WWII quarterly sample: at the aggregate level and at high frequencies the PC relationship is unstable over time, whereas in the frequency range between 32 to 64 quarters (our medium run timescale), this time dependency disappears.

Suggested Citation

  • Michele Fratianni & Marco Gallegati & Federico Giri, 2019. "Mr Phillips and the medium-run: temporal instability vs. frequency stability," Mo.Fi.R. Working Papers 155, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
    • Handle: RePEc:anc:wmofir:155
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    References listed on IDEAS

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    Cited by:

    1. Derek Zweig, 2020. "Market Power, NAIRU, and the Phillips Curve," Abstract and Applied Analysis, Hindawi, vol. 2020, pages 1-18, December.
    2. Martins, Manuel Mota Freitas & Verona, Fabio, 2021. "Inflation dynamics and forecast: Frequency matters," Bank of Finland Research Discussion Papers 8/2021, Bank of Finland.
    3. Manuel M. F. Martins & Fabio Verona, 2021. "Inflation Dynamics and Forecast: Frequency Matters," CEF.UP Working Papers 2101, Universidade do Porto, Faculdade de Economia do Porto.
    4. Aguiar-Conraria, Luís & Martins, Manuel M.F. & Soares, Maria Joana, 2023. "The Phillips curve at 65: Time for time and frequency," Journal of Economic Dynamics and Control, Elsevier, vol. 151(C).
    5. repec:zbw:bofrdp:2021_008 is not listed on IDEAS

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    More about this item

    Keywords

    Phillips Curve; frequency bands; wavelet; medium run;
    All these keywords.

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • 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

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