Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/152699
Authors: 
McAdam, Peter
Willman, Alpo
Year of Publication: 
2003
Series/Report no.: 
ECB Working Paper 265
Abstract: 
Using euro-area data, we re-examine the empirical success of New Keynesian Phillips Curves (NKPCs). The nature of our re-evaluation relies on the actual empirical underpinnings of such estimates: we find existing estimates un-robust and – given that key parameters are generally calibrated rather than estimated – potentially at odds with the data. We re-estimate with a wellspecified optimizing supply-side (which attempts to treat non-stationarity in factor income shares and mark-ups) and this allows us to derive estimates of technology parameters and marginal costs. Our resulting estimates of the euro-area NKPCs are robust, provide reasonable estimates for fixed-price durations and discount rates and embody plausible dynamic properties. Our method for identifying and estimating New Keynesian Phillips curves has general applicability to a wide set of countries and might also be used in identifying sectoral NKPCs.
Subjects: 
Euro-Area
Inflation Dynamics
Phillips Curves
Supply-Side
JEL: 
E31
Document Type: 
Working Paper

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