An Estimation of the Nonlinear Philips Curve in Colombia
As originally drawn and estimated by professor Phillips, the Phillips curve is a curve indeed, not a straight line as often thought. Following Laxton, et. al. (1999) we estimate a convex Phillips curve and model the NAIRU as a variable that is unobserved. Using Colombian data, we provide confidence bands for the NAIRU and report estimated sacrifice ratios. Using the unobserved components methodology along with the Kalman filter, we find evidence in favor of a nonlinear Phillips curve and no evidence against a NAIRU that is constant. This latter finding is explained by the high level of uncertainty in the estimation of the NAIRU. Nonlinearity implies that the sacrifice ratio increases with unemployment, in other words, the cost of decreasing inflation is higher the higher the unemployment rate.
|Date of creation:||31 Oct 2000|
|Contact details of provider:|| |
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Frank Smets, 2002. "Output gap uncertainty: Does it matter for the Taylor rule?," Empirical Economics, Springer, vol. 27(1), pages 113-129.
- Svensson, L.E.O., 1998.
"Open-Economy Inflation Targeting,"
638, Stockholm - International Economic Studies.
- Svensson, Lars E O, 1998. "Open-Economy Inflation Targeting," CEPR Discussion Papers 1989, C.E.P.R. Discussion Papers.
- Lars E. O. Svensson, 2000. "Open-Economy Inflation Targeting," NBER Working Papers 6545, National Bureau of Economic Research, Inc.
- Svensson, Lars E.O., 1998. "Open-Economy Inflation Targeting," Seminar Papers 638, Stockholm University, Institute for International Economic Studies.
- Isard, Peter & Laxton, Douglas & Eliasson, Ann-Charlotte, 2001.
"Inflation targeting with NAIRU uncertainty and endogenous policy credibility,"
Journal of Economic Dynamics and Control,
Elsevier, vol. 25(1-2), pages 115-148, January.
- Peter Isard & Douglas Laxton & Ann-Charlotte Eliasson, 2001. "Inflation Targeting with NAIRU Uncertainty and Endogenous Policy Credibility," IMF Working Papers 01/7, International Monetary Fund.
- Enrique López E. & Martha Misas A., 1999.
"Un Examen Empirico De La Curva De Phillips En Colombia,"
BORRADORES DE ECONOMIA
003676, BANCO DE LA REPÚBLICA.
- Enrique López E & Martha Misas A, 1998. "Un Examen Empírico De La Curva De Phillips En Colombia," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE, vol. 17(34), pages 39-87, December.
- Enrique López E. & Martha Misas A., 1998. "Un examen empírico de la curva de Phillips en Colombia," Ensayos sobre Política Económica, Banco de la Republica de Colombia, vol. 17(34), pages 39-87, Diciembre.
- Enrique López & Martha Misas, "undated". "Un Exámen Empírico de la Curva de Phillips en Colombia," Borradores de Economia 117, Banco de la Republica de Colombia.
- Orphanides, Athanasios & Wilcox, David W, 2002.
"The Opportunistic Approach to Disinflation,"
Wiley Blackwell, vol. 5(1), pages 47-71, Spring.
- Athanasios Orphanides & David W. Wilcox, 1996. "The opportunistic approach to disinflation," Finance and Economics Discussion Series 96-24, Board of Governors of the Federal Reserve System (U.S.).
- Athanasios Orphanides & David W. Wilcox, "undated". "The Opportunistic Approach to Disinflation," Finance and Economics Discussion Series 1996-24, Board of Governors of the Federal Reserve System (U.S.).
- P Clark & D Laxton, 1997. "Phillips Curves," CEP Discussion Papers dp0344, Centre for Economic Performance, LSE.
- Lucas, Robert Jr., 1972. "Expectations and the neutrality of money," Journal of Economic Theory, Elsevier, vol. 4(2), pages 103-124, April.
- Douglas Staiger & James H. Stock & Mark W. Watson, 1996.
"How Precise are Estimates of the Natural Rate of Unemployment?,"
NBER Working Papers
5477, National Bureau of Economic Research, Inc.
- Douglas O. Staiger & James H. Stock & Mark W. Watson, 1997. "How Precise Are Estimates of the Natural Rate of Unemployment?," NBER Chapters, in: Reducing Inflation: Motivation and Strategy, pages 195-246 National Bureau of Economic Research, Inc.
- King, Robert G. & Watson, Mark W., 1994.
"The post-war U.S. phillips curve: a revisionist econometric history,"
Carnegie-Rochester Conference Series on Public Policy,
Elsevier, vol. 41(1), pages 157-219, December.
- Robert G. King & Mark W. Watson, 1994. "The post-war U.S. Phillips curve: a revisionist econometric history," Working Paper Series, Macroeconomic Issues 94-14, Federal Reserve Bank of Chicago.
- Jean-François Fillion & André Léonard, 1997. "La courbe de Phillips au Canada : un examen de quelques hypothèses," Staff Working Papers 97-3, Bank of Canada.
- Frank Smets, 1998. "Output gap uncertainty: does it matter for the Taylor rule?," BIS Working Papers 60, Bank for International Settlements.
When requesting a correction, please mention this item's handle: RePEc:col:000094:001975. 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: (Clorith Angélica Bahos Olivera)
If references are entirely missing, you can add them using this form.