IDEAS home Printed from https://ideas.repec.org/p/zbw/esprep/64403.html

New Keynesian Macroeconomics: Empirically tested in the case of Republic of Macedonia

Author

Listed:
  • Josheski, Dushko
  • Lazarov, Darko

Abstract

In this paper we test New Keynesian propositions about inflation and unemployment trade off with the New Keynesian Phillips curve and the proposition of non-neutrality of money. The main conclusion is that there is limited evidence in line with the New-Keynesian theory. Money and growth are cointegrated series and that money growth influences the economics growth with one quarter lag. Cointegration means also that if the two series are cointegrated they have long run equilibrium. St.Louis model in the paper showed overall that increase in money growth leads to decrease in the economy growth. But the effect in the equation at three quarters lag is positive. The NAIRU rate in the unemployment inflation trade off model is almost similar as high to the actual unemployment. In the New Keynesian Phillips curve not surprisingly, there appears to be no statistically significant relationship between inflation and unemployment – even in the classical Philips curve and in adaptive expectations Philips curve by Modigliani-Papademos (1975). Or the Friedman-Phelps-Lucas expectations augmented one between the difference of actual and expected inflation rate and the gap between actual and the natural rate of unemployment presented in the next equation.

Suggested Citation

  • Josheski, Dushko & Lazarov, Darko, 2012. "New Keynesian Macroeconomics: Empirically tested in the case of Republic of Macedonia," EconStor Preprints 64403, ZBW - Leibniz Information Centre for Economics.
    • Handle: RePEc:zbw:esprep:64403
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/64403/1/NEW-KEYNESIAN.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. A. W. Phillips, 1958. "The Relation Between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861–1957," Economica, London School of Economics and Political Science, vol. 25(100), pages 283-299, November.
    2. Petra M. Geraats, 2002. "Central Bank Transparency," Economic Journal, Royal Economic Society, vol. 112(483), pages 532-565, November.
    3. Milton Friedman, 1976. "Inflation and Unemployment," Nobel Prize in Economics documents 1976-1, Nobel Prize Committee.
    4. Gerald P. Dwyer & Rik Hafer, 1988. "Is money irrelevant?," Review, Federal Reserve Bank of St. Louis, issue May, pages 3-17.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rik Hafer & David C. Wheelock, 2001. "The rise and fall of a policy rule: monetarism at the St. Louis Fed, 1968-1986," Review, Federal Reserve Bank of St. Louis, vol. 83(Jan), pages 1-24.
    2. France Krizanic & Joze Mencinger & Zan Oplotnik, 2019. "How Distortion on the Electric Power Market Can Lead to Stagflation," International Journal of Energy Economics and Policy, Econjournals, vol. 9(1), pages 26-30.
    3. Manamba EPAPHRA, 2016. "Nonlinearities in Inflation and Growth Nexus: The Case of Tanzania," Journal of Economics and Political Economy, KSP Journals, vol. 3(3), pages 471-512, September.
    4. Mulligan, Robert F. & Koppl, Roger, 2011. "Monetary policy regimes in macroeconomic data: An application of fractal analysis," The Quarterly Review of Economics and Finance, Elsevier, vol. 51(2), pages 201-211, May.
    5. Akosah, Nana Kwame & Alagidede, Imhotep Paul & Schaling, Eric, 2020. "Testing for asymmetry in monetary policy rule for small-open developing economies: Multiscale Bayesian quantile evidence from Ghana," The Journal of Economic Asymmetries, Elsevier, vol. 22(C).
    6. Frédéric Gannon & Stéphane Hamayon & Florence Legros & Vincent Touzé, 2014. "Sustainability of the French first pillar pension scheme (CNAV): assessing automatic balance," Sciences Po Economics Publications (main) hal-03460192, HAL.
    7. Kamel Helali & Thouraya Boujelbene Dammak, 2019. "Examining the Role of Structural Change in a Phillips Curve: Bivariate GARCH DCC Analysis," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 3, pages 385-393, September.
    8. Tomasz Grodzicki & Mateusz Jankiewicz, 2020. "Forecasting the Level of Unemployment, Inflation and Wages: The Case of Sweden," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 2), pages 400-409.
    9. Kenneth N Kuttner, 2004. "A Snapshot of Inflation Targeting in its Adolescence," RBA Annual Conference Volume (Discontinued), in: Christopher Kent & Simon Guttmann (ed.),The Future of Inflation Targeting, Reserve Bank of Australia.
    10. Jonne Lehtimäki & Marianne Palmu, 2022. "Who Should You Listen to in a Crisis? Differences in Communication of Central Bank Policymakers," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 11(3), pages 33-57.
    11. Christian Johnson & George G Kaufman, 2007. "Un banco, con cualquier otro nombre…," Boletín, CEMLA, vol. 0(4), pages 185-199, Octubre-d.
    12. Ivan Kitov & Oleg Kitov, 2013. "Does Banque de France control inflation and unemployment?," Papers 1311.1097, arXiv.org.
    13. Ersin Yavuz & Emre Kilic & Abdullah Emre Caglar, 2024. "A new hypothesis for the unemployment-environment dilemma: is the environmental Phillips curve valid in the framework of load capacity factor in Turkiye?," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(11), pages 29475-29492, November.
    14. Francçois Lescaroux, 2011. "The Oil Price-Microeconomy Relationship is Alive and Well," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 25-48.
    15. repec:voc:wpaper:tech82012 is not listed on IDEAS
    16. Lucas, Robert E, Jr, 1996. "Nobel Lecture: Monetary Neutrality," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 661-682, August.
    17. Skare, Marinko, 2010. "Can there be a 'golden triangle' of internal equilibrium?," Journal of Policy Modeling, Elsevier, vol. 32(4), pages 562-573, July.
    18. Bernd Hayo & Matthias Neuenkirch, 2018. "Central Banks' Predictability: An Assessment by Financial Market Participants," International Journal of Central Banking, International Journal of Central Banking, vol. 14(4), pages 163-185, September.
    19. Baeriswyl, Romain & Cornand, Camille, 2010. "The signaling role of policy actions," Journal of Monetary Economics, Elsevier, vol. 57(6), pages 682-695, September.
    20. Comitato di Redazione, 2018. "Book reviews," HISTORY OF ECONOMIC THOUGHT AND POLICY, FrancoAngeli Editore, vol. 2018(2), pages 127-155.
    21. Crowe, Christopher & Meade, Ellen E., 2008. "Central bank independence and transparency: Evolution and effectiveness," European Journal of Political Economy, Elsevier, vol. 24(4), pages 763-777, December.

    More about this item

    Keywords

    ;
    ;

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • B23 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Econometrics; Quantitative and Mathematical Studies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:esprep:64403. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/zbwkide.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.