The All‐Gap Phillips Curve

James McNeil and Gregor Smith

Oxford Bulletin of Economics and Statistics, 2023, vol. 85, issue 2, 269-282

Abstract: The all‐gap Phillips curve (PC) explains inflation by expected inflation and an activity variable such as output or the unemployment rate, but with both inflation and the activity variable measured relative to their stochastic trends and thus as gaps. We study this relationship with minimal auxiliary assumptions and under rational expectations (RE). We show restrictions on an unobserved components model that identify the PC parameters, first with an autonomous output gap and second with output and inflation gaps following a VAR. For the United States, United Kingdom, and Canada both cases yield all‐gap PCs with slopes of the expected signs, but there is little support for the restrictions implied by RE.

Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/obes.12528

Related works:
Working Paper: The All-Gap Phillips Curve (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:obuest:v:85:y:2023:i:2:p:269-282

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0305-9049

Access Statistics for this article

Oxford Bulletin of Economics and Statistics is currently edited by Christopher Adam, Anindya Banerjee, Christopher Bowdler, David Hendry, Adriaan Kalwij, John Knight and Jonathan Temple

More articles in Oxford Bulletin of Economics and Statistics from Department of Economics, University of Oxford Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().