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A Note on the Stability of the Swedish Philips Curve

Sune Karlsson () and Pär Österholm ()

No 2018:6, Working Papers from Örebro University, School of Business

Abstract: We use Bayesian techniques to estimate bivariate VAR models for Swedish unemployment rate and inflation. Employing quarterly data from 1995Q1 to 2017Q3 and new tools for model selection, we compare a model with time-varying parameters and stochastic volatility to a specification with constant parameters and covar-iance matrix. We find strong evidence in favour of the specification with time-varying parameters and sto-chastic volatility. Our results indicate that the Swedish Phillips curve has not been stable over time. However, our findings do not suggest that the Phillips curve has been flatter in more recent years.

Keywords: Inflation; Unemployment; Time-varying parameters; Stochastic volatility (search for similar items in EconPapers)
JEL-codes: C11 C32 E32 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2018-03-14
New Economics Papers: this item is included in nep-eec, nep-mac and nep-ore
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Handle: RePEc:hhs:oruesi:2018_006