Phillips Curves and Monetary Policy
نویسندگان
چکیده
This paper documents some stylized facts on evolving UK Phillips curves, and shows how these differ from their US versions. We interpret UK Phillips curve dynamics in a positive theory of monetary policy—how policy-maker attitudes on the Phillips curve have evolved since the 1950s—rather than, more traditionally, as interaction between exogenous demand and supply disturbances. Combining this framework with reasoned conjectures on how policy-makers’ beliefs have changed helps explain some features of the evolving UK Phillips curve. We suggest that correlations suggesting an extreme favorable unemployment-inflation tradeoff might indicate not something to be exploited but instead only policy-makers’ correctly acknowledging that no tradeoff exists.
منابع مشابه
Robust Discretionary Monetary Policy under Cost-Push Shock Uncertainty of Iran’s Economy
T here is always uncertainty about the soundness of an economic model’s structure and parameters. Therefore, central banks normally face with uncertainty about the key economic explanatory relationships. So, policymaker should take into account the uncertainty in formulating monetary policies. The present study is aimed to examine robust optimal monetary policy under uncertainty, by ...
متن کاملNonlinear Phillips Curve and Monetary Policy in a Keynesian Macroeconometric Model
In the framework of a Keynesian monetary macro model we study implications of a kinked Phillips-Curve and alternativemonetary policy rules. As alternative monetary policy rules we consider monetary growth targeting and interest rate targeting (the Taylor rule). Our monetary macro model exhibits: asset market clearing, disequilibrium in product and labor markets, sluggish price and quantity adju...
متن کاملAlternative Conditions to Time Inconsistency Equilibrium of an International Monetary Policy
Monetary policy rule is an approach to avoid time inconsistency problem as regarded by new classical economist to choose a time plan for policy making in order to maximize householdsâ well-being. The foundation of time inconsistency problem is not coincidence of expectations as an ex-ante variable, which is expected variable, with actual variable as an ex-post variable. Expectations in Finn K...
متن کاملDeterminacy of Equilibrium under Various Phillips Curves
Determinacy of equilibrium under the original, the backward-looking, the forward-looking and the hybrid Phillips curves is examined. If the monetary authority keeps the nominal money stock to be constant, the equilibrium path is always determinate under the original Phillips curve and the forward-looking one. Under the backward-looking one and the hybrid one, however, the path can be non-existe...
متن کاملWage and Price Phillips Curves An empirical analysis of destabilizing wage-price spirals
In this paper we introduce a small Keynesian model of economic growth which is centered around two advanced types of Phillips curves, one for money wages and one for prices, both being augmented by perfect myopic foresight and supplemented by a measure of the medium-term inflationary climate updated in an adaptive fashion. The model contains two potentially destabilizing feedback chains, the so...
متن کامل