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Title: Inflation expectations and the Phillips Curve : an encompassing framework
Other Titles: Discussion Paper 230 : Inflation expectations and the Phillips Curve an encompassing framework
Expectativas de inflação e Curva de Phillips : um quadro estrutural
Authors: Maka, Alexis
Barbosa, Fernando de Holanda
Abstract: This paper contrasts empirically four leading models of inflation dynamics – the accelerationist Phillips curve (APC), new Keynesian Phillips curve (NKPC), hybrid Phillips curve (HPC) and sticky information Phillips curve (SIPC). We employ an encompassing Phillips curve specification that allows us to derive tests for these models within a single framework. Using the generalized method of moments (GMM) estimator, the evidence suggests that the restrictions implied by the NKPC, HPC, and SIPC are rejected for the U.S. during the Great Moderation. Only the restrictions implied by the APC are not rejected. When we use methods that are robust to the issue of weak instruments in GMM, the confidence regions are so wide that it is not possible to reject any models’ restrictions, meaning that the evidence is consistent with all four models of inflation dynamics.
Rights holder: Instituto de Pesquisa Econômica Aplicada (Ipea)
License: Reproduction of this text and the data it contains is allowed as long as the source is cited. Reproductions for commercial purposes are prohibited
Type: Discussion Paper
Appears in Collections:Sistema Monetário. Finanças. Bancos: Livros
Economia. Desenvolvimento Econômico: Livros



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