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Is the Short-run Phillips Curve Nonlinear? Empirical Evidence for Australia, Sweden and the United States

  • Eliasson, Ann-Charlotte

    (Stockholm School of Economics)

Registered author(s):

    The Phillips curve has generally been estimated in a linear framework which implies a constant relationship between inflation and unemployment. Lately there have been several studies which claim that the slope of the Phillips curve is a function of macroeconomic conditions and that the relationship is asymmetric. If this is true the assumption of linearity is too restrictive. In this paper linear Phillips curves for Australia, Sweden and the United States is tested for linearity and parameter constancy. The nonlinear alternative is specified as a smooth transition regression model. It turns out that linearity is rejected for both Australia and Sweden while the Phillips curve for the United States appears to be linear.

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    File URL: http://www.riksbank.se/upload/Dokument_riksbank/Kat_foa/wp_124.pdf
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    Paper provided by Sveriges Riksbank (Central Bank of Sweden) in its series Working Paper Series with number 124.

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    Length: 26 pages
    Date of creation: 01 Sep 2001
    Date of revision:
    Handle: RePEc:hhs:rbnkwp:0124
    Contact details of provider: Postal: Sveriges Riksbank, SE-103 37 Stockholm, Sweden
    Phone: 08 - 787 00 00
    Fax: 08-21 05 31
    Web page: http://www.riksbank.com/
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