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Expectations-augmented Phillips curve: further evidence from state economies

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  • James Payne

Abstract

This paper tests the expectations-augmented Phillips-curve hypothesis for the 50 states in the US. Unlike previous work both adaptive and rational expectations are incorporated in the modeling of the Phillips-curve relationship. Second, the role of relative regional wages are taken into account. Third, the wage-price controls of 1971-72 and 1972-73 are included in the modeling efforts. The empirical results suggest that the expectations-augmented Phillips-curve model based on adaptive expectations provides better results across the 50 states than the Phillips-curve model based on rational expectations.

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  • James Payne, 1995. "Expectations-augmented Phillips curve: further evidence from state economies," Applied Economics Letters, Taylor & Francis Journals, vol. 2(8), pages 248-254.
    • Handle: RePEc:taf:apeclt:v:2:y:1995:i:8:p:248-254
    DOI: 10.1080/135048595357168
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