The Anti-Phillips Curve
Russian Academy of Sciences (RAS) - Institute for the Geospheres Dynamics
February 26, 2009
There is no Phillips curve in the United States, i.e. unemployment does not drive inflation at any time horizon. There is a statistically robust anti-Phillips curve - inflation leads unemployment by 10 quarters. Apparently, the anti-Phillips curve would be the conventional one, if the time would flow in the opposite direction. Several tests for cointegration do not reject the hypothesis that there exist a long-term equilibrium relation between inflation and unemployment in the US.
The cointegrating relation between inflation and unemployment is not the proof of causality, however, and both variables are driven by the same external force. Also presented are some statistical evidences that there exist conventional Phillips curves in Germany and France, but there is no causality link between unemployment and inflation as well.
Number of Pages in PDF File: 8
Keywords: the Phillips curve, inflation, unemployment, causality
JEL Classification: E24, E31, E52, E58working papers series
Date posted: February 26, 2009
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