Shifts in the Nineteenth-Century Phillips Curve Relationship
This paper examines shifts in the output effects of unanticipated inflation in the nineteenth-century United States by estimatinga Lucas-type aggregate supply function over the 1840-1900 period. It is shown that, in contrast to the twentieth-century experience in which there has been a pronounced movement toward greater cyclical price rigidity, the nineteenth-century output response to unanticipated price changes was roughly stable over the period. Such stability is also particularly interesting in view of the dramatic changes in communications and transportation technology, particularly the telegraph and the railroad, which greatly facilitated information flows and thereby should have forced the price-surprise coefficient downward. Other factors which may have offset the influence of these improvements in information technology on the price-surprise coefficient include the reduced general price level variability due to the gold standard in the postbellum period and the possibility that the net effects of such improvements may in fact have been small because shocks were able to spread more rapidly aswell. Finally, the perceived increase in cyclical price rigidity over the nineteenth century in the raw data is shown to have resulted not from a change in price-surprise coefficient hut rather from an increased degree of persistence or inertia in the economy.
|Date of creation:||Mar 1985|
|Date of revision:|
|Publication status:||Published as "The Stability of the 19th Century Phillips Curve Relationship", EEH, Vol. 26, no. 2 (1989): 117-134.|
|Contact details of provider:|| Postal: |
Web page: http://www.nber.org
More information through EDIRC
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.:
- Froyen, Richard T & Waud, Roger N, 1984.
"The Changing Relationship between Aggregate Price and Output: The British Experience,"
London School of Economics and Political Science, vol. 51(201), pages 53-67, February.
- Richard T. Froyen & Roger N. Waud, 1983. "The Changing Relationship Between Aggregate Price and Output: The British Experience," NBER Working Papers 1134, National Bureau of Economic Research, Inc.
- James, John A., 1984. "Public debt management policy and nineteenth-century American economic growth," Explorations in Economic History, Elsevier, vol. 21(2), pages 192-217, April.
- J. R. T. Hughes & Nathan Rosenberg, 1963. "The United States Business Cycle before i860: some Problems of Interpretation," Economic History Review, Economic History Society, vol. 15(3), pages 476-493, 04.
- Arthur F. Burns & Wesley C. Mitchell, 1946. "Measuring Business Cycles," NBER Books, National Bureau of Economic Research, Inc, number burn46-1, September.
- Gordon, Robert J, 1981.
"Output Fluctuations and Gradual Price Adjustment,"
Journal of Economic Literature,
American Economic Association, vol. 19(2), pages 493-530, June.
- Milton Friedman & Anna Jacobson Schwartz, 1970. "Monetary Statistics of the United States: Estimates, Sources, Methods," NBER Books, National Bureau of Economic Research, Inc, number frie70-1, September.
- Gordon, Robert J, 1980.
"A Consistent Characterization of a Near-Century of Price Behavior,"
American Economic Review,
American Economic Association, vol. 70(2), pages 243-49, May.
- Robert J. Gordon, 1980. "A Consistent Characterization of a Near-Century of Price Behavior," NBER Working Papers 0455, National Bureau of Economic Research, Inc.
- Zvi Hercowitz, 1980.
"Money and the Dispersion of Relative Prices,"
NBER Working Papers
0431, National Bureau of Economic Research, Inc.
- Fair, Ray C, 1979.
"An Analysis of the Accuracy of Four Macroeconometric Models,"
Journal of Political Economy,
University of Chicago Press, vol. 87(4), pages 701-18, August.
- Ray C. Fair, 1978. "An Analysis of the Accuracy of Four Macroeconometric Models," Cowles Foundation Discussion Papers 492, Cowles Foundation for Research in Economics, Yale University.
- Abramovitz, Moses & David, Paul A, 1973. "Reinterpreting Economic Growth: Parables and Realities," American Economic Review, American Economic Association, vol. 63(2), pages 428-39, May.
- Feige, Edgar L & Pearce, Douglas K, 1976. "Economically Rational Expectations: Are Innovations in the Rate of Inflation Independent of Innovations in Measures of Monetary and Fiscal Policy?," Journal of Political Economy, University of Chicago Press, vol. 84(3), pages 499-522, June.
- Stevens, Edward J, 1971. "Composition of the Money Stock Prior to the Civil War," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 3(1), pages 84-101, February.
- Godfrey, L G, 1976. "Testing for Serial Correlation in Dynamic Simultaneous Equation Models," Econometrica, Econometric Society, vol. 44(5), pages 1077-84, September.
- David, Paul A., 1977. "Invention and accumulation in america's economic growth: A nineteenth-century parable," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 6(1), pages 179-228, January.
- Lucas, Robert E, Jr, 1975. "An Equilibrium Model of the Business Cycle," Journal of Political Economy, University of Chicago Press, vol. 83(6), pages 1113-44, December.
- Lucas, Robert E, Jr, 1973. "Some International Evidence on Output-Inflation Tradeoffs," American Economic Review, American Economic Association, vol. 63(3), pages 326-34, June.
- Cukierman, Alex, 1979. "Rational expectations and the role of monetary policy : A generalization," Journal of Monetary Economics, Elsevier, vol. 5(2), pages 213-229, April.
- Michael L. Wachter, 1976. "The Changing Cyclical Responsiveness of Wage Inflation," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 7(1), pages 115-168.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:1587. 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: ()
If references are entirely missing, you can add them using this form.