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Title:Inflation convergence and the new keynesian phillips curve in the Czech Republic PDF Logo
Authors:Daniésková, Katarína
Fidrmuc, Jarko
Issue Date:2011
Series/Report no.:Arbeiten aus dem Osteuropa-Institut Regensburg, Arbeitsbereich Wirtschaft, Migration und Integration 292
Abstract:The New Keynesian Phillips Curve has become an important part of modern monetary policy models. It describes the relationship between inflation and real marginal cost, which is derived from micro-founded models with rational expectations, sticky prices, and forward and backward looking behaviour. This answers the previous critique of the Phillips Curve. We estimate several specifications of the New Keynesian Phillips Curve for the Czech Republic between 1996 and 2009. We show that the GMM suffers under the problem of weak instruments leading to biased estimates. In turn, the FIML is robust and yields significant estimates of structural parameters implying a strong forward looking behaviour.
Subjects:inflation
New Keynesian Phillips Curve
marginal costs
output gap
real unit labour costs.
JEL:E31
E52
C32
ISBN:978-3-938980-42-2
Document Type:Working Paper
Appears in Collections:Working Papers, Osteuropa-Institut Regensburg / München (OEI)

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