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Non-stationary inflation and panel estimates of the n ew Keynesian Phillips curve for Australia

Author

Listed:
  • Rao, B. Bhaskara
  • Paradiso, Antonio
  • Esposito, Piero

Abstract

This paper uses a recent panel method of Russell and Banerjee (2008) to estimate the new Keynesian Phillips curve for Australia. Our estimates show that while the hybrid new Keynesian Phillips curve and backward looking conventional Phillips curve are well determined, estimates of the Phillips curve with the pure forward looking expectations are unsatisfactory.

Suggested Citation

  • Rao, B. Bhaskara & Paradiso, Antonio & Esposito, Piero, 2011. "Non-stationary inflation and panel estimates of the n ew Keynesian Phillips curve for Australia," MPRA Paper 29242, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:29242
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    References listed on IDEAS

    as
    1. Russell, Bill & Banerjee, Anindya, 2008. "The long-run Phillips curve and non-stationary inflation," Journal of Macroeconomics, Elsevier, vol. 30(4), pages 1792-1815, December.
    2. Peter N. Ireland, 2007. "Changes in the Federal Reserve's Inflation Target: Causes and Consequences," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(8), pages 1851-1882, December.
    3. Bill Russell & Anindya Banerjee & Issam Malki & Natalia Ponomareva, 2010. "A Multiple Break Panel Approach To Estimating United States Phillips Curves," Dundee Discussion Papers in Economics 232, Economic Studies, University of Dundee.
    4. Jushan Bai & Pierre Perron, 2003. "Computation and analysis of multiple structural change models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(1), pages 1-22.
    5. Gali, Jordi & Gertler, Mark, 1999. "Inflation dynamics: A structural econometric analysis," Journal of Monetary Economics, Elsevier, vol. 44(2), pages 195-222, October.
    6. James H. Stock & Mark W. Watson, 2007. "Why Has U.S. Inflation Become Harder to Forecast?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(s1), pages 3-33, February.
    7. Henry, Olan T. & Shields, Kalvinder, 2004. "Is there a unit root in inflation?," Journal of Macroeconomics, Elsevier, vol. 26(3), pages 481-500, September.
    8. Timothy Cogley & Argia M. Sbordone, 2008. "Trend Inflation, Indexation, and Inflation Persistence in the New Keynesian Phillips Curve," American Economic Review, American Economic Association, vol. 98(5), pages 2101-2126, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Panel data estimates; new Keynesian Phillips curve; Australia and Unit roots in the rate of inflation.;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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    This paper has been announced in the following NEP Reports:

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