EconPapers    
Economics at your fingertips  
 

Estimates of the New Keynesian Phillips Curve for Pakistan

Kalim Hyder () and Stephen G. Hall
Additional contact information
Kalim Hyder: State Bank of Pakistan
Stephen G. Hall: The University of Leicester School of Business

Authors registered in the RePEc Author Service: Syed Kalim Hyder Bukhari ()

Empirical Economics, 2020, vol. 59, issue 2, No 12, 886 pages

Abstract: Abstract This paper presents estimates of the New Keynesian Phillips Curve (NKPC) for the agriculture, manufacturing and services sectors of Pakistan’s economy. The real marginal cost—derived from dynamic translog cost function—labour share of income and output gap are the indicators of economic activity along with past and expected inflation to determine inflation dynamics in each sector. The estimates of the structural parameters of the NKPC are consistent with economic theory in most of the models. Within-sample forecast performance and diagnostic tests indicate that the derived measure of real marginal cost performs better relative to the specifications with labour share of income or output gap. Further, the NKPC based on restrictive Cobb–Douglas production technology with labour input only does not perform better than the models that considers more inputs and intermediate cost. Our results show that the manufacturing is forward-looking sector followed by services and agriculture sectors.

Keywords: Inflation; Phillips curve; Real marginal cost; Pakistan (search for similar items in EconPapers)
JEL-codes: E31 E32 E47 E52 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://link.springer.com/10.1007/s00181-019-01659-8 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
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:spr:empeco:v:59:y:2020:i:2:d:10.1007_s00181-019-01659-8

Ordering information: This journal article can be ordered from
http://www.springer. ... rics/journal/181/PS2

DOI: 10.1007/s00181-019-01659-8

Access Statistics for this article

Empirical Economics is currently edited by Robert M. Kunst, Arthur H.O. van Soest, Bertrand Candelon, Subal C. Kumbhakar and Joakim Westerlund

More articles in Empirical Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

 
Page updated 2020-09-23
Handle: RePEc:spr:empeco:v:59:y:2020:i:2:d:10.1007_s00181-019-01659-8