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Great recession and the informational shifts: new evidence from sticky information Phillips curve

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  • Saten Kumar

Abstract

We utilize the nonlinear least squares (NLLS) and seemingly unrelated regression (SUR) techniques to estimate information stickiness parameter λ for the USA. We find that λ values appeared in a somewhat humped shape or inverted U pattern during the financial crisis. Prior to the financial crisis (1978.Q1-2006.Q4), λ was around 0.3. However, when the sample is extended to include the financial crisis period (1978.Q1-2011.Q4), λ increased to around 0.6. Results imply that during the financial crisis many firms became flexible and efficient and used updated information to set optimal prices.

Suggested Citation

  • Saten Kumar, 2020. "Great recession and the informational shifts: new evidence from sticky information Phillips curve," Applied Economics Letters, Taylor & Francis Journals, vol. 27(1), pages 1-4, January.
    • Handle: RePEc:taf:apeclt:v:27:y:2020:i:1:p:1-4
    DOI: 10.1080/13504851.2019.1602704
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