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State-level wage Phillips curves

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  • Kapetanios, George
  • Tasiou, Menelaos
  • Price, Simon
  • Ventouri, Alexia

Abstract

We examine reduced form versions of New Keynesian wage Phillips curves using monthly US state-level data for the period 1982-2016, taking account of the endogeneity of unemployment by instrumentation and the presence of common correlated effects (CCE). We find that theoretically coherent specifications taking account of the aggregate dynamics of unemployment may be estimated by the CCE estimator, whereas less efficient and potentially inconsistent methods differ and are problematic.

Suggested Citation

  • Kapetanios, George & Tasiou, Menelaos & Price, Simon & Ventouri, Alexia, 2018. "State-level wage Phillips curves," Essex Finance Centre Working Papers 23707, University of Essex, Essex Business School.
    • Handle: RePEc:esy:uefcwp:23707
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    More about this item

    Keywords

    Wage Phillips curves; state-level data; panel estimation; CCE; endogeneity;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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