How to disappear completely: non-linearity and endogeneity in the new keynesian wage Phillips curve

Daniel Sebastião Abreu and Artur Silva Lopes ()

MPRA Paper from University Library of Munich, Germany

Abstract: We use a three-regime threshold regression model to assess the ability of the New Keynesian Wage Phillips Curve (NKWPC) to describe wage inflation in the U.S. over the 1965-2018 period. Non-linearity is clearly supported by the data and it easily resists an endogeneity correction. However, this correction exposes more clearly the shortcomings of the NKWPC as a successful description of wage dynamics in the extreme phases of the business cycles, when unemployment is either low or high. In both cases it becomes completely flat.

Keywords: Phillips curve; wage rigidity; threshold regression; endogeneity (search for similar items in EconPapers)
JEL-codes: C22 E24 E31 E32 (search for similar items in EconPapers)
Date: 2019-06-19
New Economics Papers: this item is included in nep-mac
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Related works:
Journal Article: How to disappear completely: nonlinearity and endogeneity in the New Keynesian Wage Phillips Curve (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:94591

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