Is the Phillips Curve Valid in China?

Yang Ji (), Ran Li () and Jingxian Zou ()
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Yang Ji: National School of Development, Peking University, Beijing 100871, China
Ran Li: National School of Development, Peking University, Beijing 100871, China
Jingxian Zou: National School of Development, Peking University, Beijing 100871, China

Frontiers of Economics in China-Selected Publications from Chinese Universities, 2015, vol. 10, issue 2, 335-364

Abstract: Is the "non-existence¡± of the Phillips curve in China a truth or just an illusion due to the deficiency of data? Should policy analysis follow the light of New-Keynesian or New-classical economics? These questions require empirical work on the Phillips curve, which has long been limited in China due to an inaccurate unemployment rate and unreliable estimated output gap. Instead of the insignificant or self-contradicting results in previous work, this paper puts forward a significant estimation, creatively using the vacancy-jobseeker ratio instead of the unemployment rate. It is suggested that a robust Phillips curve cannot be ignored and New-Keynesian economics should be employed in policy analysis in the short run.

Keywords: Phillips curve; expected inflation; unemployment rate; China (search for similar items in EconPapers)
JEL-codes: E12 E24 E31 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (2)

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