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A Multimarket Approach for Estimating a New Keynesian Phillips Curve

Author

Listed:
  • Juan de Dios Tena

    (Departamento de Estadística, Universidad Carlos III, Madrid, España.)

  • Jorge Dresdner

    (Departamento de Economía, Universidad de Concepción)

  • Iván Araya

    (Departamento de Economía, Universidad de Concepción)

Abstract

We propose a new approach for estimating a “hybrid” New Keynesian Phillips Curve (NKPC)that includes demand pressures coming from disequilibrium relations in three differentmarkets: (1) monetary and financial, (2) international, and (3) labour. The results of theapplication of this approach show that all three markets contribute to the evolution of inflation. However, shocks on equilibrium in the labour market and short-run movements in cyclical output are relatively more important than other shocks. Econometric tests indicate that this specification is superior to the traditional NKPC, which includes a single variable to account for demand pressures.

Suggested Citation

  • Juan de Dios Tena & Jorge Dresdner & Iván Araya, 2009. "A Multimarket Approach for Estimating a New Keynesian Phillips Curve," Working Papers 02-2009, Departamento de Economía, Universidad de Concepción.
    • Handle: RePEc:cnc:wpaper:02-2009
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    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables

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