The New Keynesian Phillips Curve Tested on OECD Panel Data

20 Pages Posted: 18 Dec 2010

See all articles by Roger Bjørnstad

Roger Bjørnstad

affiliation not provided to SSRN

Ragnar Nymoen

University of Oslo - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: 2008

Abstract

Using a panel data set for OECD countries we replicate the typical features of the New Keynesian Phillips curve models (NPCs) that have been estimated on country data. While this corroborates the NPC also on the macro panel data set, a different conclusion is reached when we test whether the NPC encompasses an existing model of inflation which is without feed-forward terms, but which allows for other adjustment factors than the NPC. We find that the NPC?s expected rate of future inflation and real marginal costs are weak explanatory variables, and that their statistical significance in the typical NPC is due to correlation with the equilibrium correction terms that are implied by the existing inflation model. Our results are in line with the relatively few encompassing studies that exist on country and area data. --

Keywords: New Keynesian Phillips curve, forward-looking price setting, panel data model, encompassing

JEL Classification: E12, C23, E31, C52

Suggested Citation

Bjørnstad, Roger and Nymoen, Ragnar, The New Keynesian Phillips Curve Tested on OECD Panel Data (2008). Economics: The Open-Access, Open-Assessment E-Journal, Vol. 2, 2008-23, Available at SSRN: https://ssrn.com/abstract=1726818 or http://dx.doi.org/10.5018/economics-ejournal.ja.2008-23

Roger Bjørnstad (Contact Author)

affiliation not provided to SSRN ( email )

Ragnar Nymoen

University of Oslo - Department of Economics ( email )

P.O. Box 1095 Blindern
N-0317 Oslo
Norway

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