Phillips curves and unemployment dynamics
Subtitle: a critique and a holistic perspective
By: by Marika Karanassou, Hector Sala, Dennis J. Snower
Contributors: Sala, Hector
Series: Discussion paper -- no. 2265; Discussion paper (Forschungsinstitut zur Zukunft der Arbeit : Online) -- no. 2265
Publisher: IZA
Published: 2006
Place of publication: Bonn, Germany
Language: eng
Format: [electronic resource] :
Subjects: Phillips curve; Unemployment; Effect of inflation on; Keynesian economics
Description: "The conventional wisdom that inflation and unemployment are unrelated in the long-run implies that these phenomena can be analysed by separate branches of economics. The macro literature tries to explain inflation dynamics and estimates the NAIRU. The labour macro literature tries to explain unemployment dynamics and determine the real economic factors that drive the natural rate of unemployment. We show that the orthodox view that the New Keynesian Phillips curve is vertical in the long-run and that it cannot generate substantial inflation persistence relies on the implausible assumption of a zero interest rate. In the light of these results, we argue that a holistic framework is needed to jointly explain the evolution of inflation and unemployment"--Forschungsinstitut zur Zukunft der Arbeit web site.
Notes: Title from PDF file as viewed on 8/16/2006.

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