Arbeitspapier

The European Phillips curve: does the NAIRU exist?

This paper has two aims. First, it provides simple theoretical models that highlight two channels whereby monetary shocks have permanent real effects and the interactions between these channels. Second, it presents an empirical dynamic model, covering a panel of EU countries, and derives the implied long-run inflation-unemployment tradeoff. Our results suggest that the tradeoff is far from vertical. We also find that wage persistence plays a larger role than price persistence in generating the tradeoff, but that the two forms of persistence are complementary in giving monetary policy its long-run real effects. Our results call for a reassessment of the European macroeconomic experience.

Language
Englisch

Bibliographic citation
Series: IZA Discussion Papers ; No. 876

Classification
Wirtschaft
Subject
Phillips curve
nominal inertia
monetary policy
business cycles
forward-looking expectations
homogeneous dynamic panels
Phillips-Kurve
Natürliche Arbeitslosigkeit
Geldpolitik
Transmissionsmechanismus
Schätzung
EU-Staaten

Event
Geistige Schöpfung
(who)
Karanassou, Marika
Sala, Héctor
Snower, Dennis J.
Event
Veröffentlichung
(who)
Institute for the Study of Labor (IZA)
(where)
Bonn
(when)
2003

Handle
Last update
20.09.2024, 8:21 AM CEST

Data provider

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Object type

  • Arbeitspapier

Associated

  • Karanassou, Marika
  • Sala, Héctor
  • Snower, Dennis J.
  • Institute for the Study of Labor (IZA)

Time of origin

  • 2003

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