The New Keynesian Phillips Curve with Myopic Agents

Arbeitspapier

Empirical estimations of the New Keynesian Phillips curve support hybrid versions with a positive weight on lagged infl ation and a weight less than one on expected inflation. We argue that myopic price setting of some agents explains the low weight on expected inflation. The lagged term can be explained by trend extrapolation if information about the future is costly. In a laboratory experiment we implement the Calvo (1983) microfoundations of the Phillips curve. Both of our hypotheses are supported by the experimental data. About half of the subjects set optimal Calvo prices while about a third is myopic.

Object Details

• ISBN: 978-3-86788-326-9
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Ruhr Economic Papers ; No. 281

Classification and Topics

• Classification: Wirtschaft ; Design of Experiments: Laboratory, Individual ; Monetary Policy
• Subject: Hybrid Phillips curve ; experimental economics ; myopia ; behavioral macroeconomics ; Hybrid Phillips curve ; experimental economics ; myopia ; behavioral macroeconomics

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Orland, Andreas ; Roos, Michael W. M.
• Event: Veröffentlichung
• (who): Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI)
• (where): Essen
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/61674
• Last update: 10.03.2025, 11:44 AM CET