The ICU and the Phillips Curve - An Approach Based on Micro Data

Eva M. Koeberl and Sarah Lein

No 08-211, KOF Working papers from KOF Swiss Economic Institute, ETH Zurich

Abstract: In this paper we propose a straightforward method to derive a non-accelerating inflation capacity utilisation rate (ICU) based on micro data. We condition the current capacity utilisation of firms on their current and planned price adjustments. The non-accelerating inflation capacity utilisation rate is then defined as the rate where a firm feels no price adjustment pressure. One of the main advantages is that this methodology uses structural aspects and does not make it necessary to operate with - often rather arbitrary - statistical filters. We show that our aggregate ICU performs remarkably well as an indicator of inflationary pressure in a Phillips curve estimation.

Keywords: Prices; Capacity utilisation; ICU; Phillips curve (search for similar items in EconPapers)
Pages: 23 pages
Date: 2008-11
New Economics Papers: this item is included in nep-cba and nep-mac
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http://dx.doi.org/10.3929/ethz-a-005703463 (application/pdf)

Related works:
Journal Article: The NIRCU and the Phillips curve: an approach based on micro data (2011)
Journal Article: The NIRCU and the Phillips curve: an approach based on micro data (2011)
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