Which Nonlinearity in the Phillips Curve ?

  title={Which Nonlinearity in the Phillips Curve ?},
  author={Emmanuel De Veirman and Yasuo Hirose and Michael Kiley and Takeshi Kudo and Kenneth Kuttner and Douglas Laxton and Adrian R. Pagan and Erwan Quintin and John Roberts and Jirka Slacalek and Tsutomu Watanabe and I. Yamamoto and Naoyuki Yoshino},
It is standard to model the output-inflation trade-off as a linear relationship with a time-invariant slope. We assess empirical evidence for three types of nonlinearity in the short-run Phillips curve. At an empirical level, we aim to discover why large negative output gaps in Japan during the period 1998-2002 did not lead to accelerating deflation, but instead coincided with stable, be it moderately negative inflation. We document that this episode is most convincingly interpreted as… CONTINUE READING


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