The evolution of inflation and unemployment: Explaining the roaring nineties

Marika Karanassou, Hector Sala and Dennis J. Snower

No 1350, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: This paper argues that there is a nonzero inflation-unemployment tradeoff in the long-run due to frictional growth, a phenomenon that encapsulates the interplay of nominal staggering and money growth. The existence of a downward-sloping long-run Phillips curve suggests the development of a holistic framework that can jointly explain the evolution of inflation and unemployment. Hence, we estimate an interactive dynamics model for the US that includes wage-price setting and labour market equations. We then evaluate the inflation-unemployment tradeoff and assess the impact of productivity, money growth, budget deficit, and trade deficit on the unemployment and inflation trajectories during the nineties.

Keywords: Unemployment dynamics; Phillips curve; Roaring nineties; Inflation dynamics (search for similar items in EconPapers)
JEL-codes: E24 E31 E51 E62 (search for similar items in EconPapers)
Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/4032/1/kap1350.pdf (application/pdf)

Related works:
Journal Article: THE EVOLUTION OF INFLATION AND UNEMPLOYMENT: EXPLAINING THE ROARING NINETIES (2008)
Working Paper: The Evolution of Inflation and Unemployment: Explaining the Roaring Nineties (2007)
Working Paper: The Evolution of Inflation and Unemployment: Explaining the Roaring Nineties (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1350

Access Statistics for this paper

More papers in Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel) Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().