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Is The Phillips Curve
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@MISC{Razzak_isthe,
author = {Weshah Razzak and Jel Number C and Francisco Nadal-de Simone and David Mayes and Richard Dennis},
title = {Is The Phillips Curve},
year = {}
}
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Abstract
A Policy Lesson from New Zealand Non-technical summary New Zealand data show that the inflation-output relationship is asymmetric. This asymmetry implies that positive demand shocks tend to increase inflation by more than negative demand shocks of similar magnitudes reduce it. An important implication of this asymmetry is that a monetary authority with the objective of maintaining the inflation rate within a narrow band needs to react more promptly to demand shocks than otherwise be necessary. Alternatively, policy that is slow to respond to demand disturbances will result in higher inflation, and greater losses of output than would be the case with a linear Phillips curve. I am thankful to John Lapp, John Seater, Douglas Pearce and Glenn Rudebusch, for their valuable comments on early drafts. I also thank Scott
Keyphrases
phillips curve narrow band need negative demand shock inflation rate inflation-output relationship monetary authority valuable comment policy lesson glenn rudebusch douglas pearce linear phillips curve positive demand shock similar magnitude early draft john seater john lapp important implication
