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The Sticky Information Phillips Curve: Evidence for Australia

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  • Christian Gillitzer

    (Reserve Bank of Australia)

Abstract

The Sticky Information Phillips Curve (SIPC) provides a theoretically appealing alternative to the sticky-price New-Keynesian Phillips curve (NKPC). This paper assesses the empirical performance of the SIPC for Australia. There is only weak evidence in favour of the SIPC over the low-inflation period. Parameter estimates are sensitive to inflation measures and sample periods, and are theoretically inconsistent for several specifications. The apparent poor performance of the SIPC in part reflects the fact that inflation has become difficult to model since the introduction of inflation targeting. Over sample periods including the early 1990s disinflation, the SIPC appears to fit the data better.

Suggested Citation

  • Christian Gillitzer, 2015. "The Sticky Information Phillips Curve: Evidence for Australia," RBA Research Discussion Papers rdp2015-04, Reserve Bank of Australia.
    • Handle: RePEc:rba:rbardp:rdp2015-04
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    References listed on IDEAS

    as
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    Cited by:

    1. Benjamin Beckers & Anthony Brassil, 2022. "Inflation Expectations in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 55(1), pages 125-135, March.
    2. Hematy , Maryam & Pedram , Mehdi, 2015. "Threshold Effects in Sticky Information Philips Curve: Evidence from Iran," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 10(1), pages 1-23, January.

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    More about this item

    Keywords

    sticky information; Phillips curve; inflation; Australia;
    All these keywords.

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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