Output, Inflation and the New Keynesian Phillips Curve

Chadha, Jagjit S. and Nolan, Charles (2004) Output, Inflation and the New Keynesian Phillips Curve. International Review of Applied Economics, 18 (3). pp. 271-287. ISSN 0269-2171. (The full text of this publication is not available from this repository)

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Official URL
http://dx.doi.org/10.1080/0269217042000227060

Abstract

Explicit modelling of factor markets clarifies two fundamental aspects of the New Keynesian Phillips Curve (NKPC). First, we clarify the relationship between output and marginal cost. Second, for the NKPC in inflation-output space, we identify the key stochastic influences on inflation without recourse to ad hoc cost or excess demand shocks. The econometric implementation of this clarified NKPC, which evolves strictly according news on the stream of future marginal costs, allows us jointly to derive inflation as a forecast of future variables. Our approach clarifies the empirical successes and failures of the NKPC and allows us to provide new aggregate evidence on the degree of price rigidity in the UK economy.

Item Type: Article
Uncontrolled keywords: Inflation; Phillips curve; marginal cost; output gap; factor markets; price stickiness
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculties > Social Sciences > School of Economics
Depositing User: Jagjit Chadha
Date Deposited: 05 Oct 2008 09:22
Last Modified: 14 May 2014 11:20
Resource URI: http://kar.kent.ac.uk/id/eprint/11145 (The current URI for this page, for reference purposes)
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