UK Phillips Curves and Monetary Policy

Andrew Haldane and Danny Quah ()

No 2292, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper documents some stylized facts on evolving UK Phillips curves, and shows how these differ from their US versions. We interpret UK Phillips curve dynamics in a positive theory of monetary policy - how policy-maker attitudes on the Phillips curve have evolved since the 1950s - rather than, more traditionally, as interaction between exogenous demand and supply disturbances. Combining this framework with reasoned conjectures on how policy-makers' beliefs have changed helps explain some features of the evolving UK Phillips curve. We suggest that correlations suggesting an extreme favourable unemployment-inflation tradeoff might indicate not something to be exploited but instead only policy-makers' correctly acknowledging that no tradeoff exists.

Keywords: Beliefs; Inflation; Natural Rate Hypothesis; Stability (search for similar items in EconPapers)
JEL-codes: C22 C23 E31 E32 (search for similar items in EconPapers)
Date: 1999-11
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