Discussion Papers no. 500

The new Keynesian Phillips Curve revisited

Publisert:

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Recently, several authors have questioned the evidence claimed by Galí and Gertler (1999) and Galí, Gertler and López-Salido (2001) that a hybrid version of the New Keynesian Phillips Curve approximates European and US inflation dynamics quite well. We re-examine the evidence using likelihood-based methods. Although including lagged inflation enhances the empirical fit, the improvement is not large enough to yield a model that passes a likelihood ratio test. We also show that the likelihood surface is rather flat, especially in the European case, indicating that the model may be weakly identified as criticised by others using alternative methods.

Om publikasjonen

Tittel

The new Keynesian Phillips Curve revisited

Ansvarlige

Pål Boug, Anders Rygh Swensen, Ådne Cappelen

Serie og -nummer

Discussion Papers no. 500

Utgiver

Statistics Norway

Emne

Discussion Papers

Antall sider

22

Målform

Engelsk

Om Discussion Papers

Discussion papers comprise research papers intended for international journals and books. A preprint of a Discussion Paper may be longer and more elaborate than a standard journal article as it may include intermediate calculations, background material etc.

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