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SSRN Electronic Journal
Article . 2010 . Peer-reviewed
Data sources: Crossref
EconStor
Research . 2010
Data sources: EconStor
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Evolving Phillips Trade-Off

Authors: Benati, Luca;

Evolving Phillips Trade-Off

Abstract

We characterise the evolution of the U.S. unemployment-inflation trade-off since the late XIX century era via a Bayesian time-varying parameters structural VAR. The Great Inflation episode appears as historically unique along several dimensions. In particular, the shape of the ‘Phillips loop’–which is defined in terms of the impulse-response functions of inflation and unemployment’s deviations from equilibrium–was, during those years, clearly out of line with respect to the rest of the sample period for all structural innovations except money demand shocks. During the Great Depression, on the other hand, the Phillips trade-off did not exhibit any peculiar qualitative feature, so that, when seen through these lenses, the 1930s only stand out because of the sheer size of the macroeconomic fluctuation. The historical evolution of the Phillips trade-off exhibits virtually no connection with the evolution of the extent of trade openness of the U.S. economy. Although, by itself, this does not rule out a possible impact of globalisation on the slope of the trade-off in recent years, it clearly suggests that, historically, the evolution of the trade-off has been dominated by factors other than trade openness.

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Keywords

VAR-Modell, ddc:330, time-varying parameters, Lucas Critique, Bayesian VARs, Hyperinflation, Great Depression, Globalisation, Phillips trade-off, Bayes-Statistik, identified VARs, Globalisierung, Bayesian VARs, Globalisation, Great Depression, Great Inflation, identified VARs, Lucas Critique, Phillips trade-off, stochastic volatility, time-varying parameters, Wirtschaftskrise, Great Inflation, stochastic volatility, E30, Phillips-Kurve, Neue klassische Makroökonomik, USA, E32

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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
4
Average
Average
Average
bronze