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Testing the New Keynesian Phillips curve

  • Bårdsen, Gunnar

    ()

    (Norges Bank, University of Oslo and Norwegian University of Science and Technology)

  • Jansen, Eilev S.

    (Dept. of Economics, University of Oslo)

  • Nymoen, Ragnar

    ()

    (Dept. of Economics, University of Oslo)

The dynamic properties of the The New Keynesian Phillips curve (NPC) is analysed within the framework of a small system of linear di.erence equations.We evaluate the empirical results of existing studies which uses ‘Euroland’ and US data. The debate has been centered around the goodness-of-fit, but this is a weak criterion since the NPC-fit is typically well approximated by purely statistical models (e.g., a random walk). Several other parametric tests are then considered, and the importance of modelling a system that includes the forcing variables as well as the rate of inflation is emphasized. We also highlight the role of existing studies in providing new information relative to that which underlies the typical NPC. This encompassing approach is applied to open economy versions of the NPC for UK and Norway.

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File URL: http://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2002/Memo-18-2002.pdf
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Paper provided by Oslo University, Department of Economics in its series Memorandum with number 18/2002.

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Length: 41 pages
Date of creation: 17 Jun 2003
Date of revision:
Publication status: Forthcoming in Oxford Bulletin of Economics and Statistics, 2004.
Handle: RePEc:hhs:osloec:2002_018
Contact details of provider: Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Phone: 22 85 51 27
Fax: 22 85 50 35
Web page: http://www.oekonomi.uio.no/indexe.html
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