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More on Analyzing the Phillips Curve for the United States, 1950-1975

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  • Cebula, Richard

Abstract

This study has questioned the use of single-equation estimates so common in the analysis of the Phillips curve relation. The analysis in Section II and the empirical results in both Sections III and IV suggest that further research on the Phillips curve relation should consider the merits of using simultaneous-equations models and estimating by TSLS. Failure to allow for possible simultaneity problems, such as might exist between the rate of change of money wage and the inflation rate, may result in empirical results and subsequent policy statements which have very questionable validity and relevance. Given the importance of Phillips curve research for economic policy, the methodological issue at hand clearly warrants, indeed requires, further examination.

Suggested Citation

  • Cebula, Richard, 1979. "More on Analyzing the Phillips Curve for the United States, 1950-1975," MPRA Paper 50227, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:50227
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    References listed on IDEAS

    as
    1. Godfrey, Leslie G & Taylor, Jim, 1973. "Earnings Changes in the United Kingdom, 1954-70: Excess Labour Supply, Expected Inflation and Union Influence," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 35(3), pages 197-216, August.
    2. O. C. Ashenfelter & G. E. Johnson & J. H. Pencavel, 1972. "Trade Unions and the Rate of Change of Money Wages in United States Manufacturing Industry," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 39(1), pages 27-54.
    3. A. W. Phillips, 1958. "The Relation Between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861–1957," Economica, London School of Economics and Political Science, vol. 25(100), pages 283-299, November.
    4. repec:bla:econom:v:40:y:1973:i:157:p:60-72 is not listed on IDEAS
    5. Zaidi, Mahmood A, 1969. "The Determinants of Money Wage Rate Changes and Unemployment-Inflation "Trade-Offs" in Canada," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 10(2), pages 207-219, June.
    6. Turnovsky, Stephen J & Wachter, Michael L, 1972. "A Test of the "Expectations Hypothesis" Using Directly Observed Wage and Price Expectations," The Review of Economics and Statistics, MIT Press, vol. 54(1), pages 47-54, February.
    7. Frank Brechling, 1968. "The Trade-Off between Inflation and Unemployment," Journal of Political Economy, University of Chicago Press, vol. 76(4), pages 712-712.
    8. Edmund S. Phelps, 1968. "Money-Wage Dynamics and Labor-Market Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 76(4), pages 678-678.
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    More about this item

    Keywords

    inflation; the rate of change of money wages; simultaneity issues;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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