A Two-Pillar Phillips Curve for Switzerland

Petra Gerlach-Kristen

No 2006-09, Working Papers from Swiss National Bank

Abstract: Historically, money growth has played an important role in Swiss monetary policy, until 1999 as a target and from 2000 onwards as an indicator variable. Since the new policy framework focusses on an inflation forecast, the question arises how useful money growth is for predicting future price developments. Using Swiss data, this paper estimates a model first proposed by Gerlach (2004) for the euro area that integrates money growth in an inflation forecasting equation. This "two-pillar" Phillips curve suggests that the low-frequency component of money growth, alongside current inflation and the output gap, helps predict future inflation. These results are confirmed by an alternative money-augmented Phillips curve proposed by Neumann (2003).

Keywords: Inflation; money; Phillips curve; Switzerland (search for similar items in EconPapers)
JEL-codes: E31 E42 E5 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Journal Article: A Two-Pillar Phillips Curve for Switzerland (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:snb:snbwpa:2006-09

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