Evolving Inflation Dynamics and the New Keynesian Phillips Curve - Economic Quarterly Fall 2007
Article
Evolving Inflation Dynamics and the New Keynesian Phillips Curve
Evolving Inflation Dynamics and the New Keynesian Phillips Curve - Economic Quarterly Fall 2007
Evolving Inflation Dynamics and the New Keynesian Phillips Curve - Economic Quarterly Fall 2007
Fall
2007
Evolving Inflation Dynamics and the New Keynesian Phillips Curve
Andreas Hornstein {andhor1}
<p>In economic policy discussions, the negative correlation between inflation rates and unemployment rates or output growth, also known as the Phillips curve, is often invoked as representing a structural tradeoff between inflation and real activity. Arguments by Friedman and Phelps in the late 1960s and the subsequent experience of high inflation and low output growth in the 1970s convinced most economists that the Phillips curve is indeed not invariant to changes in economic policy. Recently, a variant of the Phillips curve, the New Keynesian Phillips Curve (NKPC), has gained popularity among monetary policymakers and economists as a structural representation of the inflation-output tradeoff. In this article, I study whether the NKPC can indeed be viewed as a structural relationship.</p>
/RichmondFedOrg/publications/research/economic_quarterly/2007/fall/pdf/hornstein.pdf
Inflation & Monetary Policy
1
Unemployment
Monetary Policy
Inflation
Phillips Curve
<p>In economic policy discussions, the negative correlation between inflation rates and unemployment rates or output growth, also known as the Phillips curve, is often invoked as representing a structural tradeoff between inflation and real activity. Arguments by Friedman and Phelps in the late 1960s and the subsequent experience of high inflation and low output growth in the 1970s convinced most economists that the Phillips curve is indeed not invariant to changes in economic policy. Recently, a variant of the Phillips curve, the New Keynesian Phillips Curve (NKPC), has gained popularity among monetary policymakers and economists as a structural representation of the inflation-output tradeoff. In this article, I study whether the NKPC can indeed be viewed as a structural relationship.</p>
Economic Quarterly
Fall
2007