The Phillips curve and the Italian lira, 1861-1998

Alessandra Del Boca (), Michele Fratianni, Franco Spinelli and Carmine Trecroci

Working Papers from University of Brescia, Department of Economics

Abstract: We examine Italian inflation rates and the Phillips curve with a very long-run perspective, one that covers the entire existence of the Italian lira from political unification (1861) to Italy’s entry in the European Monetary Union (end of 1998). We first study the volatility, persistence and stationarity of the Italian inflation rate over the long run and across various exchange-rate regimes that have shaped Italian monetary history. Next, we estimate alternative Phillips equations and investigate whether nonlinearities, asymmetries and structural changes characterize the inflation-output trade-off in the long run. We capture the effects of structural changes and asymmetries on the estimated parameters of the inflation-output trade-off, relying partly on sub-sample estimates and partly on time-varying parameters estimated via the Kalman filter. Finally, we investigate causal relationships between inflation rates and output and extend the analysis to include the US and the UK for comparison purposes. The inference is that Italy has experienced a conventional inflation-output trade-off only during times of low inflation and stable aggregate supply.

Date: 2009
New Economics Papers: this item is included in nep-cba, nep-his, nep-mac and nep-mon
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: The Phillips curve and the Italian lira, 1861-1998 (2010)
Working Paper: The Phillips Curve and the Italian Lira, 1861-1998 (2008)
Working Paper: The Phillips Curve and the Italian Lira, 1861-1998 (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:ubs:wpaper:0908

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