Traditional Versus New Keynesian Phillips Curves: Evidence from Output Effects (Paperback) (ISBN-13: 9781249454809)

We identify a crucial difference between the backward-ooking and forward-looking Phillips curve concerning the real output effects of monetary policy shocks. The backward-ooking Phillips curve predicts a strict intertemporal trade-off in the case of monetary shocks: a positive short-run response of output is followed by a period in which output is below baseline and the cumulative output effect is exactly zero. In contrast, the forward-looking model implies a positive cumulative output effect. The empirical evidence on the cumulated output effects of money is consistent with the forward-looking model. We also use this method to determine the degree of forward-looking price setting.

Author: Werner Roeger, Bernhard Herz
ISBN-10: 1249454808
ISBN-13: 9781249454809
Publisher: Bibliogov
Language: English
Published: 09/20/2012
Pages: 26
Format: Paperback
Weight: 0.15lbs
Size: 9.69h x 7.44w x 0.05d