More on Analyzing the Phillips Curve for the United States, 1950-1975

Richard Cebula ()

MPRA Paper from University Library of Munich, Germany

Abstract: This study has questioned the use of single-equation estimates so common in the analysis of the Phillips curve relation. The analysis in Section II and the empirical results in both Sections III and IV suggest that further research on the Phillips curve relation should consider the merits of using simultaneous-equations models and estimating by TSLS. Failure to allow for possible simultaneity problems, such as might exist between the rate of change of money wage and the inflation rate, may result in empirical results and subsequent policy statements which have very questionable validity and relevance. Given the importance of Phillips curve research for economic policy, the methodological issue at hand clearly warrants, indeed requires, further examination.

Keywords: inflation; the rate of change of money wages; simultaneity issues (search for similar items in EconPapers)
JEL-codes: E31 E61 E62 J31 (search for similar items in EconPapers)
Date: 1979-04-05
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Published in Economia Internazionale 1.33(1980): pp. 26-35

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