Testing the Monetary Policy Implications of the Accelerationist Phillips Curve

Bernhard Herz and Werner Roger
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Werner Roger: Bayreuth University (Department of Economics) and the European Commission (ECFIN)

Ekonomia, 2005, vol. 8, issue 1, 92-102

Abstract: The issue of the backward-looking versus the forward-looking Phillips curve is still an open question in the macroeconomics profession. We identify the real output effects of monetary policy shocks as a crucial implication of the traditional Phillips curve. The backward-looking Phillips curve predicts a strict intertemporal trade-off in the case of monetary shocks: a positive short run response of output is followed by a period where output is below the baseline. The resulting cumulative output effect is exactly zero. The empirical evidence on the cumulated output effects of money are in strikingly contrast to the backward-looking model.

JEL-codes: E31 E32 E40 (search for similar items in EconPapers)
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:ekn:ekonom:v:8:y:2005:i:1:p:92-102

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