Does the financial market believe in the Phillips Curve? Evidence from the G7 countries
This paper uses monthly survey data for the G7 countries for the time period 1989 - 2007 to explore the link between expectations on nominal wages, prices and unemployment rate as suggested by the traditional and Samuelson-and-Solow-type Phillips curve. Three major findings stand out: First, we find that survey participants trust in the original as well as the Samuelson-and-Solow-type Phillips curve relationship. Second, we find evidence in favor of nonlinearities in the expected Samuelson-and-Solow-type Phillips curve. Third, when we take into account a kink in the expected Phillips curve indicating that the slope of the Phillips curve differs during the business cycle, we find strong evidence of this feature in the data which confirms recent the- oretical discussions in the literature that the Phillips curve is flatter in case of an economic downturn.
|Date of creation:||2008|
|Date of revision:|
|Contact details of provider:|| Postal: Platz der Göttinger Sieben 3, 37073 Göttingen|
Web page: http://www.cege.wiso.uni-goettingen.de/
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.:
- Joseph Stiglitz, 1997. "Reflections on the Natural Rate Hypothesis," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 3-10, Winter.
- Robert J. Gordon, 1996.
"The Time-Varying NAIRU and its Implications for Economic Policy,"
NBER Working Papers
5735, National Bureau of Economic Research, Inc.
- 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.
- Gordon, Robert J, 1996. "The Time-varying NAIRU and its Implications for Economic Policy," CEPR Discussion Papers 1492, C.E.P.R. Discussion Papers.
- Laurence Boone & Claude Giorno & Mara Meacci & Dave Rae & Pete Richardson & Dave Turner, 2001. "Estimating the structural rate of unemployment for the OECD countries," OECD Economic Studies, OECD Publishing, vol. 2001(2), pages 171-216.
- Jane Ihrig & Jaime Marquez, 2004. "An Empirical Analysis of Inflation in OECD Countries," International Finance, Wiley Blackwell, vol. 7(1), pages 61-84, 03.
- Friedman, Milton, 1977. "Nobel Lecture: Inflation and Unemployment," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 451-72, June.
When requesting a correction, please mention this item's handle: RePEc:zbw:cegedp:73. 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: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.