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Time variation, asymmetry and threshold effect in Malta's Phillips curve

Author

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  • William Gatt

    () (Central Bank of Malta)

Abstract

This paper estimates a Phillips curve for Malta using data since the 1960s and presents evidence that the relationship has flattened over time, implying that the link between inflation and economic activity has weakened. Further analysis finds that this phenomenon was driven by downward price stickiness, whereby the responsiveness of price inflation is limited during economic slowdowns; however the Phillips curve was and remains alive during economic booms.

Suggested Citation

  • William Gatt, 2016. "Time variation, asymmetry and threshold effect in Malta's Phillips curve," CBM Working Papers WP/02/2016, Central Bank of Malta.
  • Handle: RePEc:mlt:wpaper:0216
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    File URL: https://www.centralbankmalta.org/file.aspx?f=31366
    File Function: First version, 2016
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • 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
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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