The NAICU and the Phillips Curve - An Approach Based on Micro Data

KOF Working Paper No. 211

25 Pages Posted: 27 Nov 2008

See all articles by Eva M. Kberl

Eva M. Kberl

ETH Zürich - Swiss Institute for Business Cycle Research

Sarah M. Lein

Swiss National Bank; University of Basel; ETH Zürich - KOF Swiss Economic Institute

Date Written: November 2008

Abstract

In this paper we propose a straightforward method to derive a non-accelerating inflation capacity utilisation rate (NAICU) based on micro data. We condition the current capacity utilisation of firms on their current and planned price adjustments. The non-accelerating inflation capacity utilisation rate is then defined as the rate where a firm feels no price adjustment pressure. One of the main advantages is that this methodology uses structural aspects and does not make it necessary to operate with - often rather arbitrary - statistical filters. We show that our aggregate NAICU performs remarkably well as an indicator of inflationary pressure in a Phillips curve estimation.

Keywords: prices, capacity utilisation, NAICU, Phillips curve

JEL Classification: E31, E32, E52

Suggested Citation

Köberl, Eva Maria and Lein, Sarah M. and Lein, Sarah M., The NAICU and the Phillips Curve - An Approach Based on Micro Data (November 2008). KOF Working Paper No. 211, Available at SSRN: https://ssrn.com/abstract=1307612 or http://dx.doi.org/10.2139/ssrn.1307612

Eva Maria Köberl (Contact Author)

ETH Zürich - Swiss Institute for Business Cycle Research ( email )

Weinbergstrasse 35
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+41 44 632 50 90 (Phone)

Sarah M. Lein

Swiss National Bank ( email )

Research
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Zuerich, 8022
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University of Basel ( email )

Petersplatz 1
Basel, CH-4003
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ETH Zürich - KOF Swiss Economic Institute ( email )

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Switzerland