Modern Phillips Curve Dynamics and the Median Wage

Abstract

This research outlines the Phillips Curve history, examines recent developments in the unemployment – inflation research (especially since the Great Recession and its impact on price and wage inflation dynamics) and takes a fresh look at explaining median wage growth movements with a parsimonious non-linear wage Phillips Curve model. The model is evaluated through time and against the Great Recession shock and presents a fruitful line of research closer to the original Phillips specification.

Keywords: Phillips Curve, Inflation Dynamics, New Keynesian Phillips Curve, New Keynesian Model, Non-Linear Model, Econometrics, Median Wage

JEL Classification: C22, E31, E52, E58, J31, N32, Y40