IDEAS home Printed from https://ideas.repec.org/a/ebl/ecbull/eb-23-00331.html
   My bibliography  Save this article

Stability of Phillips Curve: The case of Taiwan

Author

Listed:
  • Kuo-Hsuan Chin

    (Department of Economics, Feng Chia University)

  • Xin-Hua Zheng

    (Department of Economics, Feng Chia University)

Abstract

We study the time-varying slope of the Phillips curve by applying a tri-variate hybrid VAR model with time-varying parameter and stochastic volatility (hybrid TVP-VAR-SV, hereafter) to Taiwan's macroeconomic data. We follow Chan and Eisenstat (2018b) by using a Bayesian approach to approximate the posterior density of (time-varying) parameters and the marginal likelihood of a model, in which the latter one is used for the model comparison. We find that the fitness of a hybrid TVP-VAR-SV model to Taiwan's data is superior to a “non-hybrid” TVP-VAR-SV model of Primiceri (2005), a widely-used one in the current studies. In particular, the estimated parameters shown in the inflation equation, found in the best model and used to characterize the Phillips curve, are time-invariant, supporting the stability of Taiwan's Phillips curve over the past four decades. Moreover, we also find the stability of Phillips curve for China, the largest trading partner for Taiwan and similar to Taiwan in both language and culture, over the past two decades.

Suggested Citation

  • Kuo-Hsuan Chin & Xin-Hua Zheng, 2024. "Stability of Phillips Curve: The case of Taiwan," Economics Bulletin, AccessEcon, vol. 44(2), pages 635-651.
    • Handle: RePEc:ebl:ecbull:eb-23-00331
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/Pubs/EB/2024/Volume44/EB-24-V44-I2-P48.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Sune Karlsson & Pär Österholm, 2023. "Is the US Phillips curve stable? Evidence from Bayesian vector autoregressions," Scandinavian Journal of Economics, Wiley Blackwell, vol. 125(1), pages 287-314, January.
    2. Kuo‐Hsuan Chin, 2020. "Time varying structural VARs with sign restrictions: The case of Taiwan," Bulletin of Economic Research, Wiley Blackwell, vol. 72(1), pages 86-100, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Beechey, Meredith & Österholm, Pär & Poon, Aubrey, 2023. "Estimating the US trend short-term interest rate," Finance Research Letters, Elsevier, vol. 55(PA).

    More about this item

    Keywords

    Bayesian Approach; Phillips Curve; Time Varying Parameter; Vector Autoregression.;
    All these keywords.

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-23-00331. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: John P. Conley (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.