An Empirical Study on the New Keynesian Wage Phillips Curve: Japan and the US

Ichiro Muto and Kohei Shintani

No 14-E-4, Bank of Japan Working Paper Series from Bank of Japan

Abstract: We present an empirical analysis on the New Keynesian Wage Phillips Curve (NKWPC), which is derived by Gali (2011) as a micro-founded structural relationship between wage inflation and the unemployment rate under a sticky wage framework using data for Japan and the US. We find that the empirical fit of the NKWPC is generally superior for Japan. We also find that the slope of the NKWPC is much steeper in Japan than in the US. These results suggest that wages are less sticky in Japan than in the US. Inflation indexation plays a key role in the US, but is less important in Japan. Rolling estimations indicate that the NKWPC has flattened over time in Japan. Analysis of recent data indicates that in both countries the role of inflation indexation is quantitatively smaller than before, although this result might be influenced by low and stable inflation rates over the past few decades.

Keywords: Wage; Unemployment rate; New Keynesian model; Phillips curve (search for similar items in EconPapers)
JEL-codes: E24 E31 E32 (search for similar items in EconPapers)
Date: 2014-02-24
New Economics Papers: this item is included in nep-ger and nep-mac
References: Add references at CitEc
Citations: View citations in EconPapers (14)

Downloads: (external link)
http://www.boj.or.jp/en/research/wps_rev/wps_2014/data/wp14e04.pdf (application/pdf)

Related works:
Journal Article: An empirical study on the New Keynesian wage Phillips curve: Japan and the US (2020)
Working Paper: An Empirical Study on the New Keynesian Wage Phillips Curve: Japan and the US (2014)
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:boj:bojwps:wp14e04

Access Statistics for this paper

More papers in Bank of Japan Working Paper Series from Bank of Japan Contact information at EDIRC.
Bibliographic data for series maintained by Bank of Japan ().