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Alternative Phillips Curves Models with Endogenous Real-Time Expectations

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  • David Kiefer
Abstract
Originally presented as an empirical regularity, a variety of microeconomic derivations of the Phillips tradeoff between inflation and real output have been developed. Since these new Phillips curve models are expressed in terms of unobserved variables and expectations, we develop estimates of these unobservables using a state space characterization of the short-run political-economic equilibrium. This method is appropriate because it yields recursive forecasts based on contemporaneous information, and because we apply it to a real-time data set in order to accurately measure available information. Although none of the new Phillips curve tested are completely adequate, we find that Calvos sticky price formulation provides the best fit for US data. It is inadequate because the estimate coefficient for the driving variable (either the output gap or the marginal cost) is essentially zero

Suggested Citation

  • David Kiefer, 2010. "Alternative Phillips Curves Models with Endogenous Real-Time Expectations," Working Paper Series, Department of Economics, University of Utah 2010_03, University of Utah, Department of Economics.
    • Handle: RePEc:uta:papers:2010_03
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    File URL: http://economics.utah.edu/research/publications/2010_03.pdf
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    More about this item

    Keywords

    new Phillips curve; microfoundations; real-time data;
    All these keywords.

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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