THE AUSTRALIAN PHILLIPS CURVE IN THE LONG RUN Monetary Policy Regimes and Expectations Formation

Abstract

Studies typically …nd that the standard New Keynesian Phillips curve cannot adequately capture the inertia present in postwar in‡ation data. A common response has been to include lagged in‡ation in the equation, producing the Hybrid Phillips curve. However this paper demonstrates that the relationship between current and lagged in‡ation is not a stable… (More)

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