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Der Beitrag alternativer NAIRU-Kurven zur Erklärung der Inflation
[The Contribution of Alternative NAIRU-curves to the Explanation of Inflation]

Author

Listed:
  • Quaas, Georg
  • Klein, Mathias

Abstract

The Non-Accelerating Inflation Rate of Unemployment (NAIRU) is a major concept in (monetary) economics in predicting changes in the inflation rate. As the inflation neutral unemployment rate is an unobserved and, in the long run, a changing variable, several questions arise about its adequate estimation. The following study determines four different possible NAIRU-curves for the German economy during the period of 1973Q1-2010Q2 by the use of a State-Space-Model. With the help of the Ordinary-Least-Square (OLS) and the Maximum-Likelihood (ML) method, these curves are implemented and utilized in regression models which are trimmed to satisfactorily explain inflation changes. It turns out that besides the NAIRU, several other variables like the changes in the unemployment rate or the labor productivity are necessary to forecast changes in the inflation rate accurately. Among the four regression models, the one applying the NAIRU with the lowest variance and with a high theoretic plausibility has the worst record, while the equation with a NAIRU fluctuating more than the unemployment rate explains the inflation rate best.

Suggested Citation

  • Quaas, Georg & Klein, Mathias, 2010. "Der Beitrag alternativer NAIRU-Kurven zur Erklärung der Inflation
    [The Contribution of Alternative NAIRU-curves to the Explanation of Inflation]
    ," MPRA Paper 26176, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:26176
    as

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    File URL: https://mpra.ub.uni-muenchen.de/26176/1/MPRA_paper_26176.pdf
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    References listed on IDEAS

    as
    1. Robert J. Gordon, 1997. "The Time-Varying NAIRU and Its Implications for Economic Policy," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 11-32, Winter.
    2. Jordi Galí, 2011. "The Return Of The Wage Phillips Curve," Journal of the European Economic Association, European Economic Association, vol. 9(3), pages 436-461, June.
    3. Franz, Wolfgang, 2000. "Neues von der NAIRU?," ZEW Discussion Papers 00-41, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    4. Fitzenberger Bernd & Franz Wolfgang & Bode Oliver, 2008. "The Phillips Curve and NAIRU Revisited: New Estimates for Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 228(5-6), pages 465-496, October.
    5. Joseph Stiglitz, 1997. "Reflections on the Natural Rate Hypothesis," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 3-10, Winter.
    6. Roberts, John M, 1995. "New Keynesian Economics and the Phillips Curve," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(4), pages 975-984, November.
    7. Robert J. Gordon, 1990. "The Phillips Curve Now and Then," NBER Working Papers 3393, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Non-Accelerating Inflation Rate of Unemployment; NAIRU;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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