Output gap measurement and the New Keynesian Phillips curve for China

2011 ◽  
Vol 28 (6) ◽  
pp. 2462-2468 ◽  
Author(s):  
Chengsi Zhang ◽  
Yasutomo Murasawa
Keyword(s):  
Phillips Curve ◽  
New Keynesian ◽  
Output Gap ◽  
New Keynesian Phillips Curve ◽  
Gap Measurement

Inflation Dynamics and Monetary Policy in India: A New Keynesian Phillips Curve Perspective

2019 ◽  
Vol 8 (2) ◽  
pp. 144-179 ◽  
Author(s):  
Bhavesh Salunkhe ◽  
Anuradha Patnaik
Keyword(s):  
Price Index ◽  
Phillips Curve ◽  
Consumer Price Index ◽  
Wholesale Price ◽  
New Keynesian ◽  
Real Effective Exchange Rate ◽  
Output Gap ◽  
Moderate Degree ◽  
New Keynesian Phillips Curve ◽  
Price Inflation

The present study estimates various specifications of the New Keynesian Phillips Curve (NKPC) models for India over 1996Q2 to 2017Q2 using Consumer Price Index (CPI) and Wholesale Price Index (WPI) inflation, separately. The empirical results suggest that the data support all the specifications of the Phillips curve models based on both the CPI and WPI inflations. However, the backward looking and hybrid models provide robust results for both the inflation indices. While the forward-looking behaviour dominates the CPI inflation trajectory, the backward-looking behaviour greatly influences the trajectory of WPI inflation. Also, a small-to-moderate degree of persistence is evident in both the CPI and WPI inflation. The output gap, which mainly represents the demand side pressures, turns up the major force determining both the CPI and WPI inflations. Besides the output gap, real effective exchange rate (reer), international crude oil price inflation, global non-fuel commodity price inflation and rainfall have a modest impact on the CPI and WPI inflations. JEL Classification: E12, E52, C36, C14

scholarly journals Can Rational Expectations Sticky-Price Models Explain Inflation Dynamics?

2006 ◽  
Vol 96 (1) ◽  
pp. 303-320 ◽  
Author(s):  
Jeremy Rudd ◽  
Karl Whelan
Keyword(s):  
Closed Form ◽  
Empirical Evidence ◽  
Hybrid Model ◽  
Rational Expectations ◽  
Phillips Curve ◽  
New Keynesian ◽  
Output Gap ◽  
New Keynesian Phillips Curve ◽  
Inflation Dynamics ◽  
Forward Looking

The canonical inflation specification in sticky-price rational expectations models (the new-Keynesian Phillips curve) is often criticized for failing to account for the dependence of inflation on its own lags. In response, many studies employ a “hybrid” specification in which inflation depends on its lagged and expected future values, together with a driving variable such as the output gap. We consider some simple tests of the hybrid model that are derived from its closed form. We find that the hybrid model describes inflation dynamics poorly, and find little empirical evidence for the type of rational, forward-looking behavior that the model implies.

scholarly journals A hybrid model of new Keynesian Phillips Curve: An application in Indonesia

2015 ◽  
Vol 18 (3) ◽  
pp. 311
Author(s):  
Aloysius Deno Hervino
Keyword(s):  
Hybrid Model ◽  
Inflation Rate ◽  
Phillips Curve ◽  
Oil Prices ◽  
Fuel Oil ◽  
New Keynesian ◽  
Output Gap ◽  
New Keynesian Phillips Curve ◽  
Inflation Dynamics ◽  
Steady State Model

This study attempts to prove whether inflation dynamics in Indonesia can be explained by the hybrid model of New Keynesian Phillips Curve (NKPC). Output gap variable and dummy variable are also incorporated in this study as the external shock of the increase in fuel oil prices in 2004. By using a steady state model, it can be concluded that inflation dynamics in Indonesia could be explained by the hybrid model of NKPC. The variable of forward looking has significant effect on inflation dynamics, but the variable of inflationary pressure (output gap) has no significant effect on inflation dynamics. In addition, the increase in fuel oil prices in 2004 also gives pressure on the inflation rate, but when interacting with the variable of inflation (backward and forward), it even reduces its pressure on the inflation rate.

scholarly journals Movement of Inflation and New Keynesian Phillips Curve in ASEAN

Economies ◽  
2021 ◽  
Vol 9 (1) ◽  
pp. 34
Author(s):  
Adhitya Wardhono ◽  
M. Abd. Nasir ◽  
Ciplis Gema Qori’ah ◽  
Yulia Indrawati
Keyword(s):  
Inflation Rate ◽  
Phillips Curve ◽  
New Keynesian ◽  
Inflation Expectations ◽  
New Keynesian Phillips Curve ◽  
Method Of Moment ◽  
Inflation Model ◽  
Wage Inflation ◽  
Generalized Method Of Moment ◽  
Forward Looking

The development of the theory of dynamic inflation begins by linking wage inflation and unemployment. In further developments, factor of expectation is classified into inflation model. The study used inflation data is important for ASEAN, because ASEAN is one of the strengths of the international economy. This study analyzes the dynamics of inflation in the ASEAN using framework the New-Keynesian Phillips Curve (NKPC) model. The data used is the quarterly panel data from 5 ASEAN members in the period 2005.QI–2018.QIV. The study of this dynamic inflation applies quarter to quarter inflation data, meaning that the inflation rate is the percentage change in the general price of the current quarter compared to last quarter general price divided by the last quarter. The empirical results are estimated by using the Generalized Method of Moment (GMM), both of the system and first different indicates that the pattern formation of inflation expectations are backward-looking and forward-looking. In addition, the estimated NKPC models show the backward-looking behavior is more dominant than the forward looking. Changes in inflation are not entirely influenced by expectations of inflation in each country. Changes in inflation are also influenced by the output gap, changes in money supply, and exchange rate. Based on the findings of this study, it can be concluded that the NKPC models can explain the dynamics of inflation in each country in the ASEAN region.

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