Some International Evidence for Keynesian Economics Without the Phillips Curve

Roger Farmer and Giovanni Nicolo

No 13655, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Farmer and Nicolò (2018) show that the Farmer Monetary (FM)-Model outperforms the three-equation New-Keynesian (NK)-model in post -war U.S. data. In this paper, we compare the marginal data density of the FM-model with marginal data densities for determinate and indeterminate versions of the NK-model for three separate samples using U.S., U.K. and Canadian data. We estimate versions of both models that restrict the parameters of the private sector equations to be the same for all three countries. Our preferred specification is the constrained version of the FM-model which has a marginal data density that is more than 40 log points higher than the NK alternative. Our findings also demonstrate that cross-country macroeconomic differences are well explained by the different shocks that hit each economy and by differences in the ways in which national central banks reacted to those shocks.

Keywords: Phillips curve; Indeterminacy; Keynesian economics; Belief function (search for similar items in EconPapers)
JEL-codes: E3 E4 F0 (search for similar items in EconPapers)
Date: 2019-05
New Economics Papers: this item is included in nep-mac and nep-mon
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Citations: View citations in EconPapers (8)

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Related works:
Journal Article: Some International Evidence for Keynesian Economics Without the Phillips Curve (2021)
Working Paper: Some International Evidence for Keynesian Economics Without the Phillips Curve (2019)
Working Paper: Some International Evidence for Keynesian Economics without the Phillips Curve (2019)
Working Paper: Some International Evidence for Keynesian Economics Without the Phillips Curve (2019)
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