Empirical Evidence on Inflation and Unemployment in the Long Run

Alfred Haug and Ian King

No 1109, Working Papers from University of Otago, Department of Economics

Abstract: We examine the relationship between inflation and unemployment in the long run, using quarterly US data from 1952 to 2010. Using a band-pass filter approach, we find strong evidence that a positive relationship exists, where inflation leads unemployment by some 3 to 3 1/2 years, in cycles that last from 8 to 25 or 50 years. Our statistical approach is atheoretical in nature, but provides evidence in accordance with the predictions of Friedman (1977) and the recent New Monetarist model of Berentsen, Menzio, and Wright (2011): the relationship between inflation and unemployment is positive in the long run.

Keywords: Inflation; Unemployment; Long-Run Phillips Curve (search for similar items in EconPapers)
JEL-codes: E24 E31 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2011-08, Revised 2011-08
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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http://www.otago.ac.nz/economics/research/otago076667.pdf This version, 2011 (application/pdf)

Related works:
Working Paper: Empirical Evidence on Inflation and Unemployment in the Long Run (2011)
Working Paper: Empirical evidence on inflation and unemployment in the long run (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:otg:wpaper:1109

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