The Empirical (ir)Relevance of the New Keynesian Phillips Curve

Gunnar Bårdsen, Eilev Jansen and Ragnar Nymoen ()

Working Paper Series from Department of Economics, Norwegian University of Science and Technology

Abstract: We give an appraisal of the New Keynesian Phillips curve (NPC) as an empirical model of European inflation. We show that existing evidence reported in favour of the NPC on Euro-area and country data is due to a corroborative research strategy. In particular, goodness-of-fit is a weak criterion, since the NPC-fit is well approximated by a random walk. Instead we report the outcome of more critical tests, and the importance of modelling a system that includes the forcing variables as well as the rate of inflation is emphasized.Finally, encompassing tests are applied to open economy versions of the NPC for UK and Norway.

Keywords: New Keynesian Phillips curves; Euro inflation; UK inflation; Norwegian inflation; Monetary policy; Dynamic stability conditions; Evaluation; Encompassing tests (search for similar items in EconPapers)
JEL-codes: C22 C32 C52 E31 E52 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2002-06-18
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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http://www.svt.ntnu.no/iso/WP/2002/21testnkp.pdf (application/pdf)

Related works:
Working Paper: The empirical relevance of the New Keynesian Phillips curve (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:nst:samfok:2102

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