Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/4032
Authors: 
Karanassou, Marika
Sala, Héctor
Snower, Dennis J.
Year of Publication: 
2007
Series/Report no.: 
Kieler Arbeitspapiere 1350
Abstract: 
This paper argues that there is a nonzero inflation-unemployment tradeoff in the long-run due to frictional growth, a phenomenon that encapsulates the interplay of nominal staggering and money growth. The existence of a downward-sloping long-run Phillips curve suggests the development of a holistic framework that can jointly explain the evolution of inflation and unemployment. Hence, we estimate an interactive dynamics model for the US that includes wage-price setting and labour market equations. We then evaluate the inflation-unemployment tradeoff and assess the impact of productivity, money growth, budget deficit, and trade deficit on the unemployment and inflation trajectories during the nineties.
Subjects: 
Inflation dynamics
Unemployment dynamics
Phillips curve
Roaring nineties
JEL: 
E31
E51
E24
E62
Document Type: 
Working Paper

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