Original title: Inflation and the Steeplechase Between Economic Activity Variables
Authors: Baxa, Jaromír ; Plašil, M. ; Vašíček, B.
Document type: Research reports
Year: 2013
Language: eng
Series: ČNB Working Papers, volume: 15/2013
Abstract: A sharp increase in unemployment accompanied by a relatively muted response of inflation during the Great Recession added further doubts to the validity of the Phillips curve and the existence of a systemic relationship between economic activity and inflation. This paper aims to show to what extent the uncertainty about the choice of proper forcing variable contributes to the ambiguity of the evidence on the Phillips curve in the United States and other G7 countries. We use dynamic model averaging (Raftery et al., 2010), which marries the flexibility of the time-varying parameter framework with the possibility of model switching in each period. Our results show that inflation seems to respond to different measures of economic activity across time and space to a varying extent and no measure of economic activity clearly dominates in all countries or over the whole sample.
Keywords: dynamic model averaging; inflation dynamics; Phillips curve

Institution: Institute of Information Theory and Automation AS ČR (web)
Document availability information: Fulltext is available at external website.
External URL: http://library.utia.cas.cz/separaty/2014/E/baxa-0432460.pdf
Original record: http://hdl.handle.net/11104/0237104

Permalink: http://www.nusl.cz/ntk/nusl-175701


The record appears in these collections:
Research > Institutes ASCR > Institute of Information Theory and Automation
Reports > Research reports